Cardano has recently celebrated major milestones in decentralized governance, including voting on a constitution. However, tensions between the Cardano Foundation and Input Output (IOG), the primary development firm behind the network, threaten to fracture the community.
Budget Talks Ignite Conflict
Since October 2024, the Cardano community has been engaged in budget discussions, spearheaded by Intersect, a community-driven organization. After months of deliberation, Intersect published a draft budget in February 2025, with further refinements expected through May 2025. However, the budget debate has intensified following the Cardano Foundation’s recent feedback, particularly regarding funding cuts to Input Output.
A 30M+ ADA Cut Sparks Outrage
A key point of contention is the Cardano Foundation’s proposal to reduce Intersect’s suggested budget by 30%, with the biggest cut targeting Input Output. Specifically, the foundation has suggested slashing IOG’s funding from 69.8 million ADA to 38.8 million ADA—a 44% reduction amounting to over 31 million ADA.
This proposal has sparked fierce backlash within the community. Critics argue that cutting core development funding jeopardizes the progress of Cardano’s open-source infrastructure. One community member noted that technical development and research remain Cardano’s unique selling points, making such drastic cuts counterproductive. Charles Hoskinson, Cardano’s founder, echoed these concerns by amplifying the criticism on social media.
🚨#Cardano fam.
— Chris O 🌎 Cardano DRep (@TheOCcryptobro) March 12, 2025
I am NOT in favor of cutting the TECHNICAL STEERING/OPEN SOURCE BUDGET!
Our protocols open-source frameworks, libraries and tools depended on by the majority of our ecosystems projects are still a major BOTTLENECK. We need to dramatically EXPAND in order to… pic.twitter.com/DXj5WFRDBs
Accusations of Undermining IOG
The budget dispute follows growing concerns about the Cardano Foundation’s governance approach, with some community members accusing it of trying to undermine Input Output. Additionally, allegations have surfaced regarding undue influence from Swiss authorities over the foundation’s decision-making.
Despite the uproar, the Cardano Foundation maintains that its budget adjustments are aimed at ensuring financial prudence. Governance Lead Nicolas Cerny defended the cuts, citing a lack of detailed justifications for certain budget items, overlaps, and redundancy in spending. He also emphasized the need for sustainable funding models, suggesting that open-source projects should seek independent revenue streams rather than relying solely on treasury subsidies.
Also Read: Cardano (ADA) Rallies 17.8%—Can It Break Key Resistance at $0.8 and Reach $1?
As Cardano embraces decentralized governance, resolving this conflict will be crucial. The outcome of these budget talks may set a precedent for how the ecosystem balances community-driven decision-making with financial sustainability. With negotiations set to continue, all eyes remain on whether the two factions can find common ground or if this divide will deepen.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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