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

Input Output, the engineering firm responsible for Cardano's development, is requesting roughly half the funding it sought in the previous 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 2025, with several focusing on scaling Cardano to enhance its transaction capacity and venturing into Bitcoin DeFi. Cardano, similar to other major blockchains, maintains a communal fund fueled by network fees, which community representatives vote to allocate towards development projects. Historically, Input Output has been the largest recipient due to its significant role in employing engineers who build the underlying software. However, the reduced funding request marks the first step in a plan to decrease dependency on community funds. Input Output aims to gradually 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 anticipates that smaller, specialized teams, such as VacuumLabs and Midgard Labs, will take on most of the in-house work, focusing on specific layers of the Cardano software. The proposals are grouped into two main themes: scaling and Bitcoin DeFi. The larger funds will support a consensus upgrade called Leios, which Input Output claims will 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. The second flagship proposal supports a system called Pogun, which aims to introduce Bitcoin-based decentralized finance to Cardano, enabling bitcoin holders to borrow and earn yield on their holdings without relying on a centralized intermediary. Pogun's lending component is expected to be released publicly in the second quarter. Smaller proposals cover performance enhancements to Cardano's smart contract engine, security testing infrastructure, developer tools, and expanded API services. Each proposal specifies delivery leads and ties funding to delivery milestones, rather than releasing funds upfront. Voting will commence on Tuesday and run through May 24, with decisions made by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The vote will determine whether Cardano's governance treats Input Output like any other grant applicant or continues to approve its requests based on deference. 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 has assumed stewardship of core Cardano software, providing alternatives to Input Output. 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, and an increase in total assets deposited on Cardano from $137.5 million to $142.7 million. The outcome of the vote will signal the shift in the Cardano community's perspective, now that alternatives to Input Output exist.