Discussion Details

Core
Type
ACTIVE

2025 Input Output Engineering Core Development Proposal

45 comments
Submitted: 11 Apr 2025, 16:43 UTC (Epoch 551)
Updated: 1 May 2025, 02:43 UTC (Epoch 555)
# ID:151
in

inputoutput

Budget$48,408,540 (96,817,080 ADA)
ADA Rate$2.00
Preferred CurrencyUnited States Dollar (USD)
Contract TypeTime and Materials

Description

Thank you for your review and consideration. Please see the full proposal in the attached for additional information.

  • Automatic Formal Verification (Plutus High Assurance): Develop automated formal verification tool for Plinth/Cardano DApps. ($1,859,000)
  • Property Based Testing Tool (Plutus High Assurance): Develop Plinth PBT Tool to automatically generate diverse inputs/actions. ($2,366,000)
  • Static Analyzer (Plutus High Assurance): Develop "one-click" static analysis tool for Plinth contracts. ($777,140)
  • Ouroboros Leios Implementation: Begin core implementation of Leios L1 consensus protocol. ($7,098,000)
  • Cardano Node Architecture Refresh (Acropolis): Re-architect the Cardano node into a modular model (Acropolis). ($2,028,000)
  • Hydra Development: Complete Hydra v1.0 mainnet and full audit, Cardano's L2 state channel solution. ($1,859,000)
  • Minotaur AVS: Launch Minotaur, Actively Validated Service (AVS) leverage Cardano L1 security. ($1,900,000)
  • Mithril Development: Enhance Mithril protocol for secure, efficient access. Speeds up sync, enables light clients. ($1,859,000)
  • KES Agent: Implement security enhancement for SPO KES key storage and management. ($676,000)
  • Ledger-HD: Move ledger state tables from memory to disk (LSM tech) to reduce RAM. ($1,352,000)
  • Log-Structured Merge (LSM) including UTXO-HD: Integrate bespoke Well-Typed LSM-tree backend for managing on-disk state. ($1,352,000)
  • Revised Stake Pool Incentive Scheme: Investigate potential adjustments to SPO incentive scheme. ($1,352,000)
  • Nested Transactions (Babel Fees): Implement Nested Transactions ledger feature enabling tx batching. Facilitates Babel Fees. ($1,352,000)
  • Plutus Core Roadmap: Execute roadmap for Plutus Core delivering key new primitives. ($2,704,000)
  • Tiered Pricing Models (Plutus High Assurance): Introduce transaction prioritization mechanism to improve predictability during congestion. ($1,352,000)
  • Transaction Monitoring System (Plutus High Assurance): Develop system to monitor transactions, detect potential fraud/anomalies. ($1,690,000)
  • Maintenance and Support: Maintenance of existing code base, ongoing support. Includes cost of running Test & Tracing setup. ($14,682,000)
  • Audit & Security Assurance: Engage independent audits and security assurance. Consolidated item. ($2,150,400)

GRAND TOTAL: $48,408,540

Problem Statement

This proposal addresses several critical challenges and opportunities within the Cardano ecosystem necessary for its continued growth, competitiveness, and decentralization. Key problems include:

  • Scalability Limitations: The current L1 infrastructure faces throughput constraints during high demand, hindering user experience and application potential. There's a need for significant scaling solutions at both Layer 1 (consensus) and Layer 2.
  • Node Architecture & Performance: The existing node design presents limitations in terms of modularity, extensibility, performance (especially RAM usage), and ease of contribution from diverse development teams.
  • Smart Contract Assurance & Developer Experience: Developers require enhanced tools for ensuring the security, correctness, and efficiency of smart contracts to build trust and reduce risks. Improving the Plinth/Aiken/Plutarch ecosystem and providing robust testing/verification tools is essential.
  • SPO Viability & Security: Ensuring the operational security of Stake Pool Operators (SPOs) and investigating the fairness and sustainability of the incentive mechanism is vital for network health and decentralization.
  • User Experience & Adoption Barriers: Friction points like mandatory ADA fee payments and unpredictable transaction inclusion during congestion need addressing to improve usability and attract broader adoption.
  • Ecosystem Competitiveness: Cardano needs to integrate emerging blockchain paradigms like Actively Validated Services (AVS) to remain competitive and offer diverse functionalities.
  • Core Maintenance & Knowledge Transfer: The foundational codebase requires ongoing maintenance, modernization, technical debt reduction, and structured knowledge sharing to ensure stability and enable broader community participation in core development.

Proposal Benefit

In this proposal, IOE and its collaborators outline key core Cardano platform developments aimed at substantially improving network scalability, security, performance, and usability, while enhancing developer support.

Implementation of these initiatives offers substantial benefits across the Cardano community, which collectively, enhance Cardano's technical foundations, enabling it to support a larger, more complex, and more active ecosystem:

  • For the Ecosystem: Delivers massive L1 throughput increase (Leios), robust L2 scaling (Hydra, Mithril), and positions Cardano competitively in new areas like AVS (Minotaur). Enhances overall network security, resilience, and decentralization. Fosters supplier diversity through knowledge sharing and modular architecture (Acropolis). The ROI stems from increased network capacity, utility, and attractiveness, driving adoption and value.
  • For End Users: Experience significantly reduced network congestion and faster transaction processing (Leios), near-instant finality for specific applications (Hydra), the convenience of paying fees with native tokens (Nested Transactions/Babel Fees), and potentially more predictable transaction inclusion (Tiered Pricing). Enhanced security measures build user trust.
  • For Developers & dApp Builders: Gain access to advanced tools for building more secure and efficient smart contracts (Plutus High Assurance suite, Plutus Core enhancements). Benefit from a more extensible and accessible node architecture (Acropolis), easier integration with L2s and light clients (Hydra, Mithril), and improved transaction capabilities (Nested Transactions). This lowers development barriers and enables more sophisticated applications.
  • For Stake Pool Operators (SPOs): Benefit from significantly reduced node operational costs (lower RAM requirements via Ledger-HD, LSM/UTXO-HD), enhanced operational security (KES Agent), improved network performance, potential new revenue streams (Minotaur AVS), and a potentially fairer incentive structure (Revised Scheme investigation). Mithril improvements speed up node synchronization.

Key Proposal Deliverables

The tangible outcomes vary per initiative but collectively aim to significantly enhance Cardano's core infrastructure. Deliverables include:

  • Core Protocol Enhancements: Mainnet integration of major upgrades like Ouroboros Leios (dramatically increasing L1 throughput) and Nested Transactions (enabling Babel Fees) via Hard Fork events.
  • Architectural Improvements: A Proof-of-Concept and subsequent releases for the modular Acropolis node architecture, enabling greater extensibility and node diversity. Integration of the LSM backend improving on-disk state management (UTXO-HD, Ledger-HD) to significantly reduce node RAM requirements.
  • L2 & Scaling Solutions: Audited release of Hydra Head v1.0, deployment of a live Minotaur AVS network, and enhanced Mithril protocol releases providing decentralized signature diffusion, node integration, and succinct proofs for faster syncing and light client support.
  • Tooling & Developer Experience: Release of Plutus High Assurance tools (Automatic Formal Verification, Property Based Testing CLI/VSCode integration, Static Analyzer), delivery of new Plutus Core primitives (MSM, ModExp), compiler/library enhancements, and performance tooling (benchmarks, dashboards).
  • Security & Operational Improvements: Implementation of the KES Agent for SPOs, delivery of a Transaction Monitoring System (Alpha backend/frontend), and research reports/potential implementation for the Revised SPO Incentive Scheme.
  • Ongoing Maintenance: Continuous delivery of node releases, bug fixes, performance improvements, and knowledge transfer artifacts. Specific milestones, Software Readiness Level (SRL) targets, and detailed "Definition of Done" criteria will be defined for each initiative during contracting and execution phases.

Cost Breakdown

NOTE: Requested funding in this proposal are shown as USD ($) estimates only. Payment for services rendered will be requested in ADA. Provided this proposal is accepted, the USD-to-ADA rates will be determined during contracting process with Intersect. A placeholder price of $0.50 USD per ADA was used for calculation purposes, resulting in a placeholder USD-to-ADA conversion rate of 2.00 (1 USD = 2 ADA).

Resourcing & Duration

The estimated total development and audit resources required across these initiatives is 140-160 FTEs over the proposed 12-month development period (though specific initiative durations may vary). This largely consists of experienced IOE resources, supplemented by significant contributions from longstanding supporting collaborators, including but not limited to: Anastasia Labs, BCryptic, Galois, Globant, Greenwave, Lerna Labs, MLabs, Modus Create, Obsidian Systems, PaloIT, PNSol, Quviq, SAIB, Serokell, Sundae Labs, TxPipe, Vacuumlabs, and Well-Typed. IOE intends to work closely with Intersect to ensure knowledge sharing, technical education, and to foster a diverse supplier pool for Cardano's future.

Experience

Input Output (IO) realized Cardano's vision for a secure, scalable, decentralized platform through a research-driven, phased delivery (Byron to Voltaire). Leveraging formal methods, functional programming, and rigorous engineering, IO produced key achievements including Proof-of-Stake, Ouroboros consensus, Plutus smart contracts, native tokens, and scaling solutions like Hydra and Mithril.

IOE and its partners' involvement spans the entire existence of Cardano, and is demonstrated daily by its active development, support, and maintenance. Key personnel essential to this long-standing contribution are retained to continue this effort through 2025 and into 2026.

IO remains committed to furthering Cardano’s technical development, research and community engagement.

Maintenance & Support

Following development, formal verification, validation, and mainnet deployment, initiatives delivered under this proposal will transition into the ongoing Cardano Maintenance and Support scope. This scope includes essential activities like maintenance of the existing and new codebase, code modernization, addressing technical debt, bug fixes, disaster recovery, full node wallet maintenance/enhancements, and node performance improvements. A key aspect is preserving and sharing the vital knowledge embedded within the teams. While initially led by IOE, the intention is for these maintenance responsibilities to transition over time to a diverse range of capable ecosystem collaborators, supported by dedicated knowledge sharing and technical education efforts facilitated in collaboration with Intersect.

Supplementary Endorsement

Roadmap Alignment

Aligns to many of the Product Roadmap items and their goals: Developer / User Experience, Scaling the L1 Engine, Architectural Excellence, Leios, L2 Expansion, SPO Incentive Improvements, Multiple Node Implementations, Incoming Liquidity

Does your proposal align with any of the Intersect Committees?

Technical Steering Committee

Does this proposal align to the Product Roadmap and Roadmap Goals?

It supports the product roadmap

Administration and Auditing

Would you like Intersect to be your named Administrator, including acting as the auditor, as per the Cardano Constitution?

Yes

Ownership Information

Submitted On Behalf Of

Company

Social Handles

X: @InputOutputHK

Key Dependencies

While individual initiatives will have specific inbound and outbound dependencies managed during execution, several prominent dependencies significantly impact timelines and delivery capabilities across the portfolio:

  • Ouroboros Leios Implementation: Critically depends on the successful integration of the Log-Structured Merge (LSM) backend (replacing LMDB), completion of Ledger-HD (moving remaining state to disk), and interactions with Network, Crypto, and Voting layers. It also requires analysis of its impact on Ouroboros Peras.
  • Cardano Node Architecture Refresh (Acropolis): Relies on the Cardano Blueprint “Eidos” documentation initiative, the Pallas Rust libraries, and the Caryatid microservice framework.
  • Mithril Development: Dependent on Cardano’s network layer and the development of specific mini-protocols for Mithril communication involving TxPipe and Cardano Node teams.
  • Nested Transactions (Babel Fees): Implementation is contingent on prior successful hard forks and the finalization of features included in the target hard fork combinator event.
  • Ledger-HD & UTXO-HD: Both depend on the successful integration of the LSM tree backend.
  • Automatic Formal Verification (PHA): Leverages the Lean4 proof assistant and the Z3 SMT solver as backend components.
  • Blueprint “Eidos” Documentation: Has outbound dependencies on the progress of Acropolis and Amaru (Rust Node).
Created:4/11/2025
Updated:5/1/2025
ID:299
Poll Results
Votes: 72
Should this proposal be funded in the next Cardano Budget round?
YES
69 (96%)
NO
3 (4%)

Comments (45)

May 1, 2025, 02:43 AM UTC

This is a must, I fully support this

Apr 30, 2025, 08:13 AM UTC

I’d back a five-year @inputoutput proposal. I trust devs, the leadership and their track record speaks for itself. I look forward to other teams demonstrating KPIs to share in more of this budget next year.

intersecttsc
Apr 30, 2025, 08:13 AM UTC

Technical Steering Committee Comments (Part 1):

The TSC provides the following advice as a brief summary to aid the DReps and community in forming a budget proposal. A proper evaluation would take significantly longer than the time available: the TSC anticipates that such a review will be necessary prior to agreeing any contracts. This may, for example, involve determining milestones and timelines, where these are necessary or otherwise revising the original proposal.

Recommendation:

Obtain clarification where needed, including on costs. Split each sub-project out for independent review/prioritisation by the DReps. Require proper goals and milestones for each sub-project. Reduce excessive budget items.

Detailed Comments:

The IOE proposal covers $48M of spend at a rate of $299,000 per developer year (FTE), for a total of approximately 140 developer years of effort on a time and materials basis. It is a consortium bid. It covers some, but not all, elements of the 2025 core infrastructure roadmap, the majority (but not all) of the core infrastructure maintenance needs, plus some items that are not classified as core. It does not explicitly cover required integration, rollout or coordination. Technical interactions with the community and support via Intersect’s Technical Working Groups, the Security Council, TSC, OSC, Parameter Committee, workshops and other mechanisms also need to be made explicit.

Core Roadmap:

Core roadmap elements that are covered by the proposal and that are considered as high priority by the community include:

Plutus Core Roadmap. Initial Implementation of Ouroboros Leios. Hydra improvements. Mithril improvements. Ledger-HD/LSM. Revised Stake Pool Incentives Scheme.

intersecttsc
Apr 30, 2025, 08:13 AM UTC

Technical Steering Committee Comments (Part 1):

The TSC provides the following advice as a brief summary to aid the DReps and community in forming a budget proposal. A proper evaluation would take significantly longer than the time available: the TSC anticipates that such a review will be necessary prior to agreeing any contracts. This may, for example, involve determining milestones and timelines, where these are necessary or otherwise revising the original proposal.

Recommendation:

Obtain clarification where needed, including on costs. Split each sub-project out for independent review/prioritisation by the DReps. Require proper goals and milestones for each sub-project. Reduce excessive budget items.

Detailed Comments:

The IOE proposal covers $48M of spend at a rate of $299,000 per developer year (FTE), for a total of approximately 140 developer years of effort on a time and materials basis. It is a consortium bid. It covers some, but not all, elements of the 2025 core infrastructure roadmap, the majority (but not all) of the core infrastructure maintenance needs, plus some items that are not classified as core. It does not explicitly cover required integration, rollout or coordination. Technical interactions with the community and support via Intersect’s Technical Working Groups, the Security Council, TSC, OSC, Parameter Committee, workshops and other mechanisms also need to be made explicit.

Core Roadmap:

Core roadmap elements that are covered by the proposal and that are considered as high priority by the community include:

Plutus Core Roadmap. Initial Implementation of Ouroboros Leios. Hydra improvements. Mithril improvements. Ledger-HD/LSM. Revised Stake Pool Incentives Scheme.

cardanoworld
Apr 30, 2025, 08:13 AM UTC

We need this!

Apr 30, 2025, 08:13 AM UTC

This is a no brainer: IOG has done a great work and has delivered. Now we are about to harvest our sweetest fruits: we can´t stop the train now. You will always have my vote guys

inputoutput
Apr 30, 2025, 08:13 AM UTC

All- Thank you for thoughtful feedback and questions. We appreciate the engagement on our proposal. Please find further clarifying details on our Cardano Forum post here:

https://forum.cardano.org/t/further-details-on-the-io-engineering-budget-proposal/145422.

Thank you again!

Apr 30, 2025, 08:13 AM UTC

Seems ok, don't break it up, people won't understand it broken up

i203840
Apr 30, 2025, 08:13 AM UTC

let's make this happen!!! Is a lot of money, but i think this will put Cardano at the best spot in the market, an unmach tecnology, the best bedrock for the future of the project. Yes, yes and yes.

Apr 30, 2025, 08:13 AM UTC

Conditionally YES - The contents of the proposal should be rationally broken down, DRep should vote on each item, and the results should be reflected in the proposal. In order to keep the total expenditure for 2025 within 200M, please separate items that can be spent in 2026 into items that can be spent without any problems and items that should be spent by December 2025.

everyonematter
Apr 30, 2025, 08:13 AM UTC

Anastasia Labs possesses strong technical expertise in Haskell and the Cardano infrastructure, making them a highly capable team. Developing a solution to improve TPS (transactions per second) and manage the data flow from Layer 1 (L1) would be a strategic move. We would like to understand: • The estimated timeline for completion • The ongoing operational costs associated with the solution Brazil / São Paulo on-line workshop. Vote: Yes

everyonematter
Apr 30, 2025, 08:13 AM UTC

IOG has been an excellent vendor, consistently delivering high-quality products free of bugs or security issues over the years. However, we currently lack the necessary budget to fund all planned developments. Greater transparency—such as clear cost estimates for projects like Leios—would help us make more informed decisions. Additionally, with IOG prioritizing Midnight’s timeline, we’re curious about their capacity to deliver on other commitments like Hydra, Leios, and other promised initiatives in the pipeline. Could they provide updates on these projects? Brazil / São Paulo on-line workshop. Yes

Apr 30, 2025, 08:13 AM UTC

I think I will ultimately vote YES on this once I see that sufficient breakdown-specific temperature checks with DRep have been conducted and that those temperature checks are properly reflected in the proposal.

I would like to have the IOG proposal budget items broken down as much as possible in the reconciliation workshops and have each DRep vote on a temperature check.

I don't think it's necessary to split up the proposal and resubmit it in Govtool or submit multiple budget info actions separately.

It's probably not productive to have a general discussion about whether the total amount of IOG's proposal is high or low. Let's break it down and do a temperature check of DRep to see what is necessary and what is not.

hubworkshop
Apr 30, 2025, 08:13 AM UTC

The Buenos Aires, Argentina Workshop acknowledges that Input Output has demonstrated a solid track record, expertise, and transparency. However, the following recommendations are made:

  • Continue working on node architecture to enhance scalability and its broader ecosystem impact.

  • Establish incentives for knowledge transfer.

  • Increase transparency by implementing clear criteria for budgeting and procurement.

  • Coordinate more closely with other areas of the ecosystem to assess the feasibility of implementations—for example, in Self-Sovereign Identity (SSI).

It is strongly recommended to improve communication with the non-technical community. Effectively conveying this transparency is essential in the era of decentralized governance, as it can help mitigate misunderstandings that might otherwise cause friction during budget approval processes.

Apr 30, 2025, 08:13 AM UTC

Taking into account IOG's past contributions and extensive experience, we fully support this proposal

yeaok
Apr 30, 2025, 08:13 AM UTC

How does community vote on which items they want funded plus which conditions they want met before funding is granted? We are to give IOG more than 100 million ADA when we don't even have transparency about how much ADA is left from 2.4 billion genesis ADA? That needs to be the first condition. Second is that any new funding needs to be transparent. As for the line items, if the community wanted to trim the fat to reduce amount of funding for this proposal, how is this pushed for? Is IOG open to feedback?

Apr 30, 2025, 08:13 AM UTC

The Cardano infrastructure was created by the IOHK engineering team and no other entity has yet shown the prowess necesarry to replace the CORE creators development teams. I find value in the continuation of the maintenance under IOHK until otherwise proven a necessity to change.

Apr 30, 2025, 08:13 AM UTC

This proposal is essential for the future of Cardano.

Apr 30, 2025, 08:13 AM UTC

✅ Yes – A Structural Investment for Cardano’s Future

This proposal is not merely a set of feature enhancements. Rather, it represents a structural and strategic investment aimed at evolving Cardano into a nation-scale infrastructure platform.

It goes beyond temporary technical competition with Ethereum, Solana, or Polkadot, and instead advances Cardano’s unique vision: building a sustainable and formally grounded blockchain foundation for real-world adoption.

This proposal delivers on three core pillars: • ✅ Decentralization: A structure that enables broad participation from diverse SPOs and development vendors • ✅ Resilience: A robust infrastructure enabled by lightweight nodes and a modular architecture • ✅ Utility: Improved usability and responsiveness for dApp developers and end users

I highly value how this proposal integrates these elements at a high level and therefore cast my Yes vote in full support.

Apr 30, 2025, 08:13 AM UTC

How IO select Labs partners?

Apr 30, 2025, 08:13 AM UTC

This budget proposal is in competition for a similiar budget proposal in the Core category from the Intersect TSC. In choosing between the two, I am inclined to choose the one that is cheaper and more transparent, assuming the same level of quality. As it currently stands, the TSC proposal seems to be "winning" in that regard.

I have some questions for IOG in that regard:

  1. Can you elaborate on the cost breakdown and deliverables for the "Maintenance and Support" line item? 14.6 million USD seems high for maintanence work, especially when something like Leios, which arguably one of the most complex software projects to date, is less than half of that.
  2. Can you elaborate on the cost breakdown and deliverables for the "Revised Stake Pool Incentive Scheme" line item? There have been community efforts, CIPs, and ideas for several years about things that could be changed related to SPO incentives. And even now there is a community working group doing some of this work for free. 1.3 million USD seems high for something like this without clear deliverables.

Related to both of these questions is the fact that the TSC's proposal is currently the cheaper of the two. Some clarification on at least these two line items might go a long way to justify the additional costs that IOG is asking for.

Apr 30, 2025, 08:13 AM UTC
  1. If TSC's Budget is adopted, will IOG participate in the public bidding held by TSC?

  2. Are there plans to create a separate Cardonao Budget proposal outlining items that are outside the scope of the TSC Budget but are within the scope of this proposal?

Apr 30, 2025, 08:13 AM UTC

Supportive in general of many of the items in this proposal, but have concerns over lumping everything into a single proposal for a single binary yes / no vote. Would ideally like to see large budget proposals like this broken down into goals / projects / teams with separate budgets. Maybe a line item capability for voting would be useful. Have not voted yet at the time of this comment.

Apr 30, 2025, 08:13 AM UTC

While there are many aspects of this I'd like to see, it's difficult to judge how much of these are truly important right now. If I were to break down maybe must haves or potential key critical components vs would like to haves, I can come up with 7 or 8 in this list which could save a few million (Leios, Multiple Node, Minotaur, Ledger-HD, KES, Plutus Core, Tiered Pricing, Maintenance/Support).

cardanoyoda
Apr 30, 2025, 08:13 AM UTC

Regarding technology, it contains exactly what Cardano needs and what IOE is responsible for. The only thing I would like to see there is the implementation of a one-shot signature. However, this is a negligible detail.

I found these things in the document interesting and have further questions:

• It mentions the development costs of individual items for the year. It lacks a delivery date and a specification of what part will be delivered in one year. • Many people criticize the high maintenance costs. Maintenance also applies to the new codebase, so this is justifiable. I did not investigate how big the technology debt is. • The costs of some items seem enormous to me. For example, the Property Based Testing Tool for 2.3M USD or the Cardano Node Architecture Refresh for 2M USD. • The total requested amount is 48.4M USD. I would like to know more about the process of converting ADA to USD. For example, what will happen if the price of ADA is only 0.3 USD at the time of conversion? IOE would need half of NCL (it is not yet clear what NCL will be approved).

In general, I think IOG should provide more details.

I was mostly concerned with whether the costs are justifiable. The document says that 140-160 FTEs are expected over the proposed 12-month development period.

I calculated annual salary and overhead costs of 60% for 160 employees for the given average salary.

Average salary | Total costs 100,000 USD | 25.6M USD 200,000 USD | 51.2M USD 250,000 USD | 64M USD 300,000 USD | 76.8M USD

It seems that the average salary of employees will be around 200,000 USD. This is fair considering these figures:

• Median annual salary for an IT professional worldwide: $100,000 • In the US, it is: $140,000 (but can $240,000) • Typical full-stack developer: $65,000 • Uniswap is looking for devs for: $230,000 • Aptos is looking for devs for: $260,000 • Contractors cost 2x to 3x more than a typical employee.

It depends on where the developers are from. I don’t expect them all to be US-based and contractors. If all the developers were from Europe, I think the total cost could be $30M.

We all want the best available developers and researchers working on Cardano.

Cardano is developed using formal methods. That’s expensive.

I vote YES, but I would like to know more details about where the individual teams are from and how many of them will be working on specific projects.

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