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 substantial reduction in funding from the project's treasury. The company has submitted nine proposals totaling $46.8 million for 2026, down from $97.5 million in the previous year. These proposals focus on enhancing Cardano's scalability to increase its transaction capacity and exploring Bitcoin DeFi opportunities. Cardano, similar to other major blockchains, has a community-managed treasury that allocates funds for development work through a voting process. Historically, Input Output has been the primary recipient of these funds due to its significant role in developing the underlying software. The reduced funding request marks the first step in a plan to gradually decrease Input Output's dependence on community funds. The company aims to reduce its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a broader range of smaller engineering teams. By the end of 2026, Input Output expects smaller, specialized teams, such as VacuumLabs and Midgard Labs, to take on a significant portion of the work currently handled in-house. The proposals are grouped into two main themes: scaling and Bitcoin DeFi. The primary proposal funds the Leios consensus upgrade, which is expected to increase Cardano's transaction processing capacity by 10 to 65 times, targeting over 1,000 transactions per second. This upgrade is scheduled for a test release in June and full deployment by the end of the year. The second key proposal supports the development of Pogun, a system designed to bring Bitcoin-based decentralized finance to Cardano. This system will enable bitcoin holders to borrow and earn yield on their holdings through Cardano without relying on centralized intermediaries. The lending component of Pogun is expected to be released publicly in the second quarter. Smaller proposals focus on improving the performance of Cardano's smart contract engine, security testing infrastructure, developer tools, and API services. Each proposal outlines specific delivery leads and ties funding to delivery milestones, rather than providing upfront funding. The voting process, which begins on Tuesday and runs through May 24, will be decided by approximately 1,000 elected delegates known as DReps, who represent ADA holders. Charles Hoskinson, the founder of Input Output, is scheduled to release a video this week to make the case directly to these delegates. The outcome of the vote will test whether Cardano's governance treats Input Output like any other grant applicant or continues to approve its requests based on its historical role in the project. Last year's $97.5 million proposal was approved, but significant changes have occurred since then, including the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These changes mean that alternatives to Input Output now exist, which may impact the voting outcome. Input Output also highlighted progress in the ecosystem, including the launch of a new Cardano stablecoin, USDCx, which reached 14.6 million tokens in circulation within weeks of its launch. The total assets deposited on Cardano increased from $137.5 million to $142.7 million over the same period. The outcome of the vote will signal how much the Cardano community's perspective has shifted, now that alternatives to Input Output exist for funding development.