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 requesting approximately half the funding it sought last year from the project's community treasury. The company has submitted nine proposals totaling $46.8 million for 2026, down from $97.5 million in the previous year. Several proposals focus on enhancing Cardano's scalability to increase its transaction processing capacity and exploring Bitcoin DeFi opportunities. Cardano, similar to other major blockchains, has a shared pool of funds generated from network fees, which community representatives allocate towards development projects through a voting process. Historically, Input Output has been the primary recipient of these funds due to its significant role in building the underlying software. However, the company now aims to reduce its annual funding requests, with the goal of becoming self-sufficient and allowing community funds to support smaller, specialized engineering groups. By the end of 2026, Input Output expects smaller teams, such as VacuumLabs and Midgard Labs, to take on a significant portion of its current in-house work. The nine proposals are categorized into two main themes: scaling and Bitcoin DeFi. A key proposal, Leios, aims to increase Cardano's transaction processing capacity by 10 to 65 times, targeting over 1,000 transactions per second. This would position Cardano as a competitive chain, comparable to Solana and the fastest Ethereum layer-2 networks in terms of throughput. Leios is scheduled for a test release in June and full deployment by the end of the year. Another significant proposal, Pogun, aims to introduce Bitcoin-based decentralized finance to Cardano, enabling bitcoin holders to borrow and earn yield on their holdings without relying on centralized intermediaries. Pogun's lending component is expected to be released publicly in the second quarter. Smaller proposals focus on enhancing 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 releasing funds upfront. The voting process, which opens on Tuesday and runs through May 24, will be decided by approximately 1,000 elected delegates, known as DReps, who represent ADA holders. The outcome of the vote will indicate whether Cardano's governance treats Input Output as any other grant applicant or continues to approve its requests based on its historical significance. Last year's $97.5 million proposal was approved, but the Cardano Foundation has since taken over the project's grant-funding arm, and Intersect, the governance organization, has assumed stewardship of core Cardano software. These changes mean that alternatives to Input Output now exist, which may impact the voting outcome. Input Output also noted progress in the ecosystem, including the launch of a new Cardano 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 has shifted, given the existence of tools to fund development without relying on Input Output.