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

Input Output, the private company responsible for building and maintaining the Cardano blockchain, is seeking a substantial reduction in funding from the project's community treasury, requesting approximately half of the amount it sought last year. The company has submitted nine proposals totaling $46.8 million for 2026, down from $97.5 million in the previous year. These proposals primarily focus on scaling Cardano to enhance its transaction processing capacity and expanding into Bitcoin-based decentralized finance (DeFi). Cardano, similar to other major blockchains, operates a shared fund that is fueled by network fees, with community representatives voting to allocate these funds towards development work. Historically, Input Output has been the largest recipient of these funds due to its significant role in employing engineers who develop the underlying software. This reduced funding request marks the first concrete step in a plan to gradually decrease Input Output's dependency on community funds. The company now aims to reduce its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a broader range of smaller, specialized engineering groups. By the end of 2026, Input Output expects smaller teams, such as VacuumLabs and Midgard Labs, to take over most of the work currently handled in-house, including specific layers of the Cardano software. The proposals are grouped into two primary themes: scaling and Bitcoin DeFi. The most significant funding is allocated to a consensus upgrade called Leios, which Input Output claims will increase Cardano's transaction processing capacity by 10 to 65 times, aiming for over 1,000 transactions per second. For context, 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, with full deployment expected by the end of the year. The second major proposal funds a system called Pogun, designed to bring Bitcoin-based DeFi to Cardano. This system would enable bitcoin holders to borrow and earn yield on their holdings through Cardano without relying on a centralized intermediary. Pogun's lending component is targeted for public release 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 on these proposals opens on Tuesday and will run through May 24, with decisions 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, directly addressing these delegates. The outcome of the vote will test 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 significant changes have occurred since then, including the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These shifts mean alternatives to Input Output now exist, which could influence the voting outcome. Input Output also highlighted ecosystem progress, noting that a new Cardano stablecoin, USDCx, has reached 14.6 million tokens in circulation within weeks of its launch. 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, given the existence of tools to fund development without relying on Input Output.