Executive Summary
Input Output Global (IOG) has lodged a formal request for $46.8 million from Cardano’s decentralized treasury to fund operations for 2026. The amount is less than half of the $97.5 million approved for 2025, reflecting a shift toward external development partners. The proposal centers on two strategic pillars: unlocking idle Bitcoin liquidity through the upcoming Pogun DeFi engine and scaling Cardano’s base layer via the Leios consensus upgrade.
What Happened
IOG submitted the funding request this week, outlining a budget that will support the rollout of key infrastructure projects slated for the second half of 2026. The request earmarks resources for the Leios consensus upgrade, the Hydra state‑channel protocol, the Midgard optimistic rollup, and the Pogun DeFi engine that will bridge Bitcoin liquidity onto Cardano.
Background / Context
Cardano’s long‑term Vision 2030 aims to lift monthly transaction volume from roughly 800,000 to more than 27 million and to achieve throughput exceeding 1,000 transactions‑per‑second (TPS). Today the mainnet processes about 7‑10 TPS and finalizes blocks in roughly two hours, far short of the vision.
The upcoming “Leios” consensus upgrade introduces Endorser Blocks and a committee‑based validation model. Early projections suggest a capacity increase of 10‑65×, enough to breach the 1,000 TPS threshold. A public testnet for Leios is scheduled for June 2026, with a mainnet release candidate expected by the end of the year.
Off‑chain scaling solutions also play a critical role. Hydra, a state‑channel protocol, promises zero‑fee, sub‑second micropayments, while the Midgard permissionless optimistic rollup leverages Cardano’s accounting model to enable single‑party fraud proofs and target transaction fees below one cent.
On the DeFi front, the “Pogun” engine is designed to bring Bitcoin liquidity onto Cardano using the Extended UTXO model for deterministic, low‑MEV financial logic. Its rollout plan spans the year: Q2 2026 will see a non‑margin credit market with bilateral loan agreements, Q3 2026 will add a yield‑generating dApp for retail users, and Q4 2026 will debut a trust‑minimized BitVM‑powered Bitcoin‑Cardano bridge.
Reactions
Stakeholders within the Cardano ecosystem have noted the reduced treasury request as a sign that IOG is transitioning development responsibilities to external contractors such as Midgard Labs and VacuumLabs. Community members, who have historically seen the treasury’s funding decisions dominated by IOG, view the shift as an attempt to broaden participation and reduce centralization risk.
Developers focused on scaling have welcomed the explicit allocation for Leios and Hydra, emphasizing that the projected throughput gains are essential for meeting Vision 2030’s transaction‑volume targets. Meanwhile, DeFi advocates have highlighted the strategic importance of unlocking idle Bitcoin liquidity, a move they believe could attract new capital to Cardano’s ecosystem.
What It Means
The funding request signals a concentrated effort to close the performance gap between Cardano’s current state and its long‑term ambitions. By investing in Leios, Cardano aims to overcome the two‑hour finality bottleneck and position itself competitively against other high‑throughput blockchains.
Simultaneously, the Pogun DeFi engine represents a clear strategy to diversify Cardano’s liquidity sources. Bringing Bitcoin’s vast liquidity pool onto Cardano could enhance the utility of native assets, stimulate new financial products, and increase overall network activity.
The decision to taper treasury reliance and involve external contractors suggests a maturation of Cardano’s development model. If successful, this could lead to a more decentralized innovation pipeline and greater resilience against single‑point‑of‑failure concerns.
What Happens Next
Key milestones are set for the remainder of 2026. In June, the Leios public testnet will go live, providing the community with an early look at the upgraded consensus mechanism. By the end of the year, a mainnet release candidate for Leios is expected, paving the way for full deployment in 2027.
On the DeFi side, the Pogun rollout will progress through its quarterly phases, culminating in the launch of a BitVM‑powered bridge that enables trust‑minimized Bitcoin‑Cardano interactions. Parallel to these efforts, Hydra and Midgard will continue to be integrated into the ecosystem, aiming to deliver sub‑second payments and ultra‑low‑fee rollup transactions.
Finally, IOG’s plan to hand over a larger share of development to Midgard Labs, VacuumLabs, and other external teams will be monitored closely. Successful handoff could set a precedent for future treasury‑funded projects and influence how Cardano’s governance evolves as Vision 2030 unfolds.