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

Input Output, the private 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 primarily focus on enhancing Cardano's scalability to increase its transaction capacity and exploring the integration of Bitcoin DeFi. Cardano, similar to other major blockchains, operates a communal fund fueled by network fees, which is allocated by community representatives through a voting process. Historically, Input Output has been the largest recipient of these funds due to its significant role in employing engineers who develop the underlying software. However, the company aims to gradually decrease its reliance on community funding, intending to become self-sustainable through its own revenue. This reduced funding request is the first step towards achieving this goal, with plans to gradually reduce annual requests until community funds can be redirected towards supporting a broader range of smaller, specialized engineering teams. By the end of 2026, Input Output anticipates that smaller teams, such as VacuumLabs and Midgard Labs, will assume a significant portion of the work currently handled in-house, focusing on specific aspects of the Cardano software. The proposals submitted by Input Output can be categorized into two primary themes: scaling and Bitcoin DeFi. A significant portion of the funding is allocated towards a consensus upgrade known as Leios, which is expected to enhance Cardano's transaction processing capacity by 10 to 65 times, potentially exceeding 1,000 transactions per second. This upgrade would position Cardano as a competitive force alongside Solana and the fastest Ethereum layer-2 networks in terms of throughput. Leios is scheduled for a test release in June, with full deployment expected by the end of the year. The second key proposal is for a system called Pogun, designed to introduce Bitcoin-based decentralized finance to the Cardano ecosystem. This system would enable bitcoin holders to borrow and earn yield on their holdings through Cardano without the need for a centralized intermediary. Pogun's lending component is targeted for public release in the second quarter. Other proposals cover improvements 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 providing upfront funding. The voting process, which commenced on Tuesday and will run through May 24, will be decided by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The outcome of this vote will indicate whether Cardano's governance treats Input Output as any other grant applicant or continues to approve its requests based on historical deference. Last year's $97.5 million proposal was approved, but the governance landscape has since evolved, with the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These changes introduce alternatives to Input Output, potentially influencing the voting outcome. Input Output also highlighted ecosystem progress, including the launch of a new Cardano stablecoin, USDCx, which reached 14.6 million tokens in circulation within weeks, and an increase in total assets deposited on Cardano from $137.5 million to $142.7 million. The outcome of the vote will signal the shift in the Cardano community's approach to funding development, now that alternatives to Input Output exist.