Cardano Developer Seeks Reduced Funding of $46.8 Million for Expansion and DeFi Development

Input Output, the engineering company responsible for building and maintaining the Cardano blockchain, has submitted nine proposals for the 2026 funding cycle, totaling $46.8 million. This amount is approximately half of what was requested in the previous year. The proposals focus on enhancing the scalability of Cardano to increase its transaction capacity and exploring the realm of Bitcoin DeFi. Cardano, similar to other major blockchains, has a communal treasury that is funded by network fees. The community votes to allocate these funds towards development projects. Historically, Input Output has been the primary recipient of these funds due to its significant role in building the underlying software. The reduced funding request marks the first step in a 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 be allocated to a broader range of smaller engineering groups. By the end of 2026, Input Output expects smaller, specialized teams to take over a significant portion of its current in-house work. This includes firms like VacuumLabs and Midgard Labs, which focus on specific aspects of the Cardano software. The proposals are categorized into two main themes. The first theme involves a consensus upgrade called Leios, which Input Output claims will increase Cardano's transaction processing capacity by 10 to 65 times. This would enable Cardano to process over 1,000 transactions per second, making it competitive with Solana and the fastest Ethereum layer-2 networks in terms of throughput. Leios is scheduled for a test release in June and is expected to be fully deployed by the end of the year. The second flagship proposal involves a system called Pogun, which aims to introduce Bitcoin-based decentralized finance to Cardano. This would allow Bitcoin holders to borrow and earn yield on their holdings through Cardano without having to rely on a centralized intermediary. The lending component of Pogun is expected to be released to the public in the second quarter. Other proposals include 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 delivery milestones, rather than releasing the funds upfront. This approach is similar to paying a contractor in stages as different parts of a project are completed, rather than providing the full budget at the outset. The voting process begins on Tuesday and will run through May 24. The decisions will be made 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 a case directly to these delegates. The outcome of the vote will determine 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 proposal of $97.5 million was approved, but since then, the Cardano Foundation has taken over the project's grant-funding arm, and Intersect has assumed stewardship of the core Cardano software. These changes mean that alternatives to Input Output now exist, which was not the case in previous votes. Input Output also highlighted progress in the ecosystem, including the launch of a new Cardano stablecoin, USDCx, which has reached 14.6 million tokens in circulation within weeks of its launch. The total assets deposited on Cardano have risen 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 there are tools in place to fund development without relying on Input Output.