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

Input Output, the company responsible for developing the Cardano blockchain, is seeking a substantially lower amount of funding from the project's treasury for 2026. The company has submitted nine proposals totaling $46.8 million, 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 community-managed treasury that allocates funds for development work based on voting by community representatives. Historically, Input Output has been the primary recipient of these funds due to its significant role in building and maintaining the Cardano software. However, the company is now aiming to reduce its dependence on community funding by gradually decreasing its annual requests until it can sustain itself through its own revenue. This strategy involves shifting the focus of community funds towards supporting a more diverse range of smaller engineering groups. By the end of 2026, Input Output expects that smaller, specialized teams will take over a significant portion of its current responsibilities, including firms like VacuumLabs and Midgard Labs that specialize in specific aspects of the Cardano software. The proposals submitted by Input Output can be categorized into two main themes: scaling and Bitcoin DeFi. A key proposal is the funding for a consensus upgrade called Leios, which is designed to significantly increase Cardano's transaction processing capacity, potentially making it competitive with other leading blockchains like Solana and 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. Another significant proposal is for a system called Pogun, aimed at integrating Bitcoin-based decentralized finance into Cardano. This would enable bitcoin holders to borrow and earn yield on their bitcoin holdings through Cardano without needing to rely on centralized intermediaries. The system's lending component is targeted for public release in the second quarter. Additionally, there are smaller proposals focused on enhancing the performance of Cardano's smart contract engine, improving security testing infrastructure, developing more robust developer tools, and expanding API services. Each proposal outlines specific delivery leads and ties funding to the achievement of delivery milestones, rather than providing upfront funding. This approach is similar to paying a contractor in stages as different parts of a project are completed. The voting process for these proposals begins on Tuesday and will run through May 24, with decisions made by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The outcome of this vote will be a critical test of whether Cardano's governance treats Input Output similarly to other grant applicants or if it continues to approve its requests based on historical precedent. Last year, Input Output's $97.5 million proposal was approved, but since then, significant changes have occurred in Cardano's governance structure, 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, potentially altering how funding decisions are made. Input Output also highlighted the progress made in the Cardano ecosystem, including the launch of a new stablecoin, USDCx, which has reached 14.6 million tokens in circulation, and an increase in total assets deposited on Cardano from $137.5 million to $142.7 million. The outcome of the vote will signal how the Cardano community's perspective on development funding has evolved, especially now that there are tools in place to support development beyond Input Output.