Cardano stands at a critical juncture, with governance evolving from decentralized decision-making toward a structured constitution. A widening divide threatens stability as the ecosystem moves closer to community-led control. Long-standing tensions between the Cardano Foundation and Input Output have escalated amid intense budget negotiations for 2025.
A major flashpoint emerged when the Cardano Foundation proposed a 44% reduction in Input Output’s funding, slashing the allocation from 69.8 million ADA to 38.8 million ADA. The 31 million ADA cut directly affects core development, technical steering, and open-source initiatives, triggering widespread opposition within the community.
Source Cardano: Foundation
Budget discussions, launched in October 2024 under Intersect’s oversight, took a pivotal turn in February 2025 when a draft proposal surfaced. As negotiations extend into May, the unexpected funding reduction has fueled heated debate over network priorities.
Community Pushback on Research and Engineering Cuts
The proposed funding reduction has sparked significant concern. Many emphasize the importance of open-source libraries and core protocols as fundamental components of Cardano’s development. A prominent community member expressed strong opposition, stating that the initiative appears to weaken IOG. He said:
“To me this proposal looks like CF is trying to undermine IOG. Makes no sense to cut on research and engineering as this is one of our USPs.”
Cardano’s founder, Charles Hoskinson, fueled the discussion further by endorsing this viewpoint with a GIF, which said, “This guy gets it.” His reaction encapsulated the growing frustration within the Cardano ecosystem, where fears of stifling innovation and undercutting development efforts have taken center stage.
Beyond online discussions, skepticism has grown regarding the motivations driving the budget cuts. Critics question whether financial necessity dictates the decision or if it signals an attempt to reshape power structures within the ecosystem. Some speculate that heightened scrutiny over the Swiss government’s influence on the Cardano Foundation could be influencing the organization’s assertive stance.
Cardano Foundation Defends Budget Decision
Despite the backlash, the Cardano Foundation insists that the proposed cuts are rooted in financial prudence rather than malice. Governance Lead Nicolas Cerny pushed back against accusations, stating:
“There was a call for feedback, which we answered and diligently reviewed all the budget line items of the various proposals. It is my opinion that as an active participant in the governance space on Cardano the CF has an obligation to provide input.”
A detailed spreadsheet reveals that the foundation cited issues like item duplication and lack of transparency as justifications for the reductions. However, these explanations have done little to quell the community’s frustration, with many questioning whether slashing development funding aligns with Cardano’s long-term vision.
Cerny encouraged greater adoption of Cardano’s open-source tools, stressing the importance of long-term self-sufficiency. He argued that perpetual reliance on treasury subsidies for development and maintenance raises concerns about sustainability.