Cardano Approves $71M Upgrade to Boost Scalability and Interoperability

The Cardano (ADA) community has approved a $71 million treasury funding plan to support a one-year upgrade initiative aimed at enhancing scalability, developer accessibility, and system interoperability [1]. The proposal, backed by 74% of voters with 200 votes in favor, six against, and seven abstentions, was put forward by Input Output Global (IOG), the core engineering team behind Cardano. The independent project administrator for the initiative will be Intersect, a Cardano member-based governance body [1].

The funding will be distributed through a milestone-based structure governed by smart contracts and a multisignature oversight committee [1]. IOG will provide monthly engineering updates, timesheets, and quarterly budget breakdowns to ensure accountability. The plan includes the implementation of Hydra, a layer 2 protocol designed to enable fast, low-cost transactions, and Project Acropolis, which involves re-architecting the Cardano node using Rust for modularity and easier onboarding of developers [1].

The current average transaction cost is 0.34 ADA, with an average block time of approximately 20 seconds. The upgrade is expected to reduce RAM usage for stake pool operators and lay the groundwork for more complex smart contracts and cross-chain interactions [1].

Despite the proposal's passage, some community members expressed concerns over the use of a lump sum funding model, with critics suggesting that breaking the program into smaller, separately voted initiatives would have improved transparency and accountability. A competing proposal from the Technical Steering Committee (TSC) was not endorsed by Intersect, leading to debates over the appropriateness of IOG's single-vendor approach versus a more decentralized bidding process [1].

Tim Harrison, IOG’s Vice President of Community & Ecosystem, acknowledged the increased expectations around transparency and delivery following the approval of the funding [1]. This treasury authorization comes amid ongoing evolution in Cardano’s governance structure. Intersect has recently launched on-chain treasury withdrawal actions, with 39 proposals currently under vote by Delegate Representatives (DReps) and the interim Constitutional Committee. The ratification of these proposals is enforced through smart contracts, linking payments to specific outcomes [1].

In addition to the $71 million upgrade funding, a separate IOR (Incentivized Research) proposal has been put forward to allocate 26.8 million ADA for foundational research in consensus mechanisms, tokenomics, Hydra, interchain communication, and governance reforms. This initiative is intended to support multi-year workstreams and is distinct from the immediate upgrade program [1].

The approval of the $71 million investment marks a significant step toward community-driven development funding and transparent governance. As Cardano moves toward full decentralization under its Voltaire roadmap, this vote is expected to help balance innovation with oversight [1]. The outcome reflects a broader trend in blockchain development, where governance mechanisms are increasingly being tested and refined to ensure long-term sustainability and community trust.

Sources:

[1] Cardano’s $71 Million Upgrade: Will It Deliver or Divide the Community? (https://coinmarketcap.com/community/articles/68907ebb995da309bf62e0e6/)