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

Input Output, the primary engineering company responsible for building and maintaining the Cardano blockchain, is seeking a substantially lower amount of funding from the project's treasury this year. The company has submitted nine proposals amounting to $46.8 million for 2026, marking a notable reduction from the $97.5 million requested in 2025. Several proposals focus on enhancing Cardano's scalability to increase transaction processing capacity and exploring Bitcoin DeFi opportunities. Cardano, similar to other major blockchains, operates a communal treasury funded by network fees, which are allocated through a voting process by community representatives. Historically, Input Output has been the largest recipient of these funds due to its significant role in developing the underlying software. However, this reduced funding request represents the first concrete step towards reducing Input Output's dependence on community funds. The company aims to gradually decrease its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a broader range of smaller engineering groups. By the end of 2026, Input Output anticipates that smaller, specialized teams will assume most of its current in-house responsibilities, including collaborations with firms like VacuumLabs and Midgard Labs that focus on specific layers of the Cardano software. The proposals are categorized into two primary themes: scaling and Bitcoin DeFi integration. A significant portion of the funding is allocated to the Leios consensus upgrade, which Input Output claims will increase Cardano's transaction processing capacity by 10 to 65 times, potentially exceeding 1,000 transactions per second. This upgrade is scheduled for a test release in June and full deployment by the end of the year. Another key proposal is the Pogun system, designed to introduce Bitcoin-based decentralized finance to Cardano, enabling bitcoin holders to borrow and earn yield on their holdings without relying on centralized intermediaries. The lending component of Pogun is targeted for public release in the second quarter. Smaller proposals cover various improvements, including 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, ensuring a staged release of funds rather than upfront allocation. Voting on these proposals will commence on Tuesday and conclude on May 24, with roughly 1,000 elected delegates, known as DReps, making the decisions on behalf of ADA holders. The outcome of this vote will be a significant test of Cardano's governance, particularly in how it treats Input Output's requests in comparison to other grant applicants. Last year's $97.5 million proposal was approved, but the governance landscape has evolved since then, with the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These changes have introduced alternatives to Input Output, which may influence the voting outcome. Input Output also highlighted progress within 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 result of the vote will signal a shift in the Cardano community's approach to funding development, potentially indicating a more diversified and less dependent ecosystem.