Input Output Global, the primary software laboratory behind the Cardano blockchain, has cut its annual request from Cardano’s community treasury in half, seeking $46.8 million to fund 2026 operations—a reduction from the $97.5 million approved for 2025. The move signals an intentional step away from single-entity dominance toward a development model where specialized third-party firms assume a greater share of engineering responsibilities across the ecosystem.
Technology Overview
Cardano, one of the largest cryptocurrencies by market capitalization, manages a community-governed treasury financed by on-chain transaction fees. Historically, Input Output Global captured the majority of those allocations. Under its revised plan, the company intends to taper treasury reliance each year and reorient how core protocol work is executed. By the close of 2026, external contractors such as Midgard Labs and VacuumLabs are expected to absorb substantial portions of the protocol’s internal development pipeline, distributing roadmap execution across multiple teams.
The 2026 funding slate is organized into nine components but concentrates spending on two primary goals: scaling the base layer to meet the network’s “Vision 2030” benchmarks and capturing idle Bitcoin liquidity through new decentralized finance architectures. The emphasis reflects a strategy to increase throughput and utility simultaneously, aligning infrastructure upgrades with commercially focused applications.
How It Works: Leios and Base-Layer Scaling
The largest line item in the request is “Leios,” a comprehensive consensus upgrade designed to rework Cardano’s transaction processing capacity. Input Output Global argues that achieving Vision 2030 requires moving from a baseline of roughly 800,000 monthly transactions to more than 27 million—an ambition that calls for a material change to the base layer.
Today, Cardano’s mainnet finality sits at around two hours, with throughput of roughly 7 to 10 transactions per second. Those constraints have limited participation in high-frequency enterprise scenarios and left the field open to faster rivals such as Solana and various Ethereum Layer-2 networks. Leios targets this bottleneck by introducing Endorser Blocks and committee-based validation, mechanisms intended to parallelize and streamline validation without compromising the network’s security foundations.
According to the proposal, these design changes are projected to lift capacity by 10 to 65 times. If realized, Cardano would cross the 1,000 transactions-per-second threshold and, with higher activity levels, generate the fee revenue required for economic self-sufficiency. The development schedule is assertive: an early public testnet is planned for June 2026, with a mainnet release candidate targeted by year-end.
Layer-2 and Off-Chain Acceleration
Complementing Layer-1 work, Input Output Global plans to strengthen off-chain scaling tracks. The company is putting resources into production-hardening the “Hydra” protocol, a state channel framework for sub-second, zero-fee micropayments that can move high-frequency activity off the main chain while settling outcomes on Cardano. In parallel, it is advancing “Midgard,” a permissionless optimistic rollup tailored to Cardano’s unique transaction accounting model.
A notable element in Midgard’s design is the use of single-party fraud proofs. By leveraging Cardano’s model, the rollup aims to simplify dispute resolution and, in theory, reduce Layer-2 costs to below one cent per transaction. Together, Hydra and Midgard are positioned to shift volume away from the base layer for speed-critical or cost-sensitive use cases, while preserving on-chain security guarantees for settlement.
Tapping Bitcoin Liquidity: The Pogun Initiative
On the application side, the most commercially oriented effort in the 2026 plan is “Pogun,” a decentralized finance engine intended to put Bitcoin to work on Cardano. The initiative is premised on the extended unspent transaction output (EUTXO) model that underpins Cardano’s smart contracts. Because EUTXO shares a direct lineage with Bitcoin’s accounting design, the team believes developers can build deterministic financial logic with predictable fees and avoid manipulation associated with maximum extractable value (MEV).
Pogun’s rollout spans three quarters. In the second quarter of 2026, the team plans to introduce a non-margin credit market. Instead of relying on volatile price oracles and forced liquidations, this market enables bilateral agreements where borrowers and lenders negotiate terms directly. Collateral is only forfeited in the event of an outright default, rather than during temporary price swings.
In the third quarter, a yield-generating decentralized application is slated to follow, offering retail participants fixed-term strategies without the complexity of arranging bespoke bilateral deals. The final component, targeted for the fourth quarter, is a trust-minimized, BitVM-powered bridge. Using a 1-of-N security model, the bridge is designed so institutional custodians need only a single honest operator—potentially their own organization—to ensure the safety of bridged Bitcoin.
Developer Experience and Plutus Upgrades
To convert new capabilities into real adoption, the proposal dedicates significant resources to developer tooling. Input Output Global aims to improve the rate of developer onboarding by at least 30% through a streamlined stack that reduces setup friction and shortens time-to-first-deploy. A “cardano-init” command-line interface is planned to simplify project bootstrapping, while an OpenZeppelin-style library of standardized, auditable smart contracts is intended to provide vetted building blocks for common patterns.
The plan also targets the Plutus smart contract platform. Current execution costs and script preparation times function as a drag on developers, with redundant scope-checking cited as inflating preparation by roughly 25%. The 2026 roadmap proposes removing that overhead and expanding available cryptographic primitives. The goal is to lower on-chain execution costs and make complex decentralized applications economically viable, enabling more sophisticated use cases to fit within fee budgets.
Industry Impact
If Leios delivers the anticipated 10x–65x improvement and pushes Cardano beyond 1,000 transactions per second, the network could contend more directly in categories currently dominated by chains or rollups that prioritize raw throughput. Faster finality and higher capacity would address pain points that have historically limited participation in high-frequency or enterprise-aligned workloads, while off-chain channels like Hydra and an optimistic rollup such as Midgard would further reduce latency and costs for targeted use cases.
On the liquidity side, Pogun’s design seeks to convert Bitcoin—often held passively—into productive capital within Cardano’s ecosystem under a model intended to minimize exposure to forced unwinds and oracle-driven liquidations. The staged delivery across credit markets, yield strategies, and a BitVM bridge frames a path to onboard both retail and institutional users, with the 1-of-N security paradigm aimed at aligning with the operational constraints of custodians.
Future Implications
The downsized treasury request and redistribution of engineering work to firms like Midgard Labs and VacuumLabs mark a governance and operational shift for Cardano. As the network expands capacity and introduces specialized financial rails for Bitcoin, the success of the 2026 plan will depend on converting technical milestones—Leios on mainnet, a hardened Hydra, a functioning Midgard rollup, and the full Pogun stack—into sustained usage.
Should the roadmap hold, Cardano’s base layer would be positioned to meet the Vision 2030 scaling targets while its Layer-2 and DeFi tracks provide complementary avenues for performance and liquidity. With a leaner treasury draw and a diversified development pipeline, the network is setting out to couple throughput gains with practical, revenue-generating applications—anchoring growth in both infrastructure and the markets it aims to serve.
