Cardano Developer Requests Reduced Funding of $46.8 Million for Expansion and DeFi Integration

Input Output, the company responsible for building and maintaining the Cardano blockchain, is seeking a substantially lower amount of funding from the project's community treasury this year. The company has submitted nine proposals totaling $46.8 million for 2026, marking a notable reduction from the $97.5 million requested in 2025. These proposals focus on enhancing Cardano's scalability and exploring opportunities in Bitcoin DeFi. Cardano, similar to other major blockchains, has a shared fund that is financed by network fees, and community representatives vote to allocate these funds towards development projects. Historically, Input Output has been the largest recipient of these funds due to its significant role in employing engineers who work on the underlying software. The reduced funding request is part of a broader plan to decrease Input Output's dependence on community funds. The company aims to gradually reduce its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a more diverse range of smaller engineering groups. By the end of 2026, Input Output expects that smaller, specialized teams will take over most of the work currently handled in-house, including collaborations with firms like VacuumLabs and Midgard Labs that focus on specific aspects of the Cardano software. The proposals can be grouped into two main categories: scaling and Bitcoin DeFi. The most significant funding allocation is for a consensus upgrade called Leios, which Input Output claims will increase Cardano's transaction processing capacity by 10 to 65 times, potentially exceeding 1,000 transactions per second. This upgrade is scheduled for a test release in June and full deployment by the end of the year. For context, the successful implementation of Leios would position Cardano as a competitive force alongside Solana and the fastest Ethereum layer-2 networks in terms of throughput. The second major proposal is for a system called Pogun, designed to integrate Bitcoin-based decentralized finance into the Cardano ecosystem. This system would enable bitcoin holders to borrow and earn yield on their holdings through Cardano without relying on centralized intermediaries. The lending component of Pogun is targeted for public release in the second quarter. Other proposals address performance enhancements to Cardano's smart contract engine, security testing infrastructure, developer tools, and expanded API services. Each proposal outlines specific delivery leads and ties funding to the achievement of delivery milestones, rather than releasing funds upfront. This approach is akin to paying a contractor in stages as different parts of a project are completed, rather than providing the full budget at the outset. Voting on these proposals begins on Tuesday and will run through May 24. The decisions are made by approximately 1,000 elected delegates known as DReps, who represent ADA holders in a manner similar to proxy representatives in publicly traded companies. Charles Hoskinson, the founder of Input Output, is scheduled to release a video this week, directly addressing these delegates to make the case for the proposals. The outcome of the vote will be a significant test of Cardano's governance system, which has undergone considerable expansion over the past two years. It will indicate whether the governance treats Input Output as any other grant applicant or if it continues to approve its requests based on historical deference. Last year's proposal for $97.5 million was approved, but since then, the Cardano Foundation has taken over the project's grant-funding arm, and Intersect, the governance organization overseeing this vote, has assumed stewardship of core Cardano software. These changes mean that alternatives to Input Output now exist in a way they did not during previous votes. Input Output also highlighted progress within the ecosystem, noting that a new Cardano stablecoin, USDCx, has reached 14.6 million tokens in circulation just weeks after its launch. Additionally, total assets deposited on Cardano, a key measure of network usage, have increased from $137.5 million to $142.7 million over the same period. The fate of the proposals - whether they are fully approved, partially funded, or significantly altered by the DReps - will signal a shift in the Cardano community's perspective, now that mechanisms exist to fund development independent of Input Output.