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

Input Output, the company responsible for building and maintaining the Cardano blockchain, is requesting a substantially lower amount of funding from the community treasury this year. The company has submitted nine proposals totaling $46.8 million for 2026, marking a considerable reduction from its $97.5 million request in 2025. Several proposals focus on enhancing Cardano's scalability to increase its transaction processing capacity, as well as expanding into the realm of Bitcoin decentralized finance (DeFi). Cardano, similar to other major blockchains, has a shared fund that is replenished by network fees, with community representatives voting to allocate these funds towards development projects. Historically, Input Output has been the largest recipient of these funds due to its significant role in employing engineers who work on the underlying software. However, this reduced funding request is the first step in a plan to gradually decrease Input Output's reliance on community funds. The company aims to reduce its annual funding requests until it can sustain itself through its own revenue, allowing community funds to be allocated to a broader range of smaller engineering groups. By the end of 2026, Input Output expects smaller, specialized teams to take over a significant portion of its current in-house work, including firms like VacuumLabs and Midgard Labs that focus on specific aspects of the Cardano software. The submitted proposals are categorized into two primary themes. The first theme involves a consensus upgrade called Leios, which Input Output claims will increase Cardano's transaction processing capacity by 10 to 65 times, with a target of over 1,000 transactions per second. For context, this upgrade would position Cardano as a competitive chain, rivaling 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 flagship proposal involves a system called Pogun, which aims to integrate Bitcoin-based DeFi into Cardano. This would enable bitcoin holders to borrow and earn yield on their holdings through Cardano without needing to rely on a centralized intermediary. The lending component of Pogun is expected to be released to the public 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, rather than releasing funds upfront. Voting on these proposals begins on Tuesday and will run through May 24. The decisions will be 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, making a direct appeal to 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 established relationships. Last year's $97.5 million proposal was approved, but since then, the Cardano Foundation has taken over the project's grant-funding arm, and Intersect, the governance organization, has assumed stewardship of core Cardano software. These shifts mean that alternatives to Input Output now exist, which could influence the voting outcome. Input Output also highlighted progress within the ecosystem, noting that a new Cardano stablecoin, USDCx, has reached 14.6 million tokens in circulation just weeks after its launch. Additionally, total assets deposited on Cardano have increased from $137.5 million to $142.7 million over the same period. The outcome of the vote will signal whether the Cardano community's perspective has shifted, now that there are tools in place to fund development without relying on Input Output.