Cardano Foundation Resets Community Funding Model, Analyzing Influence on ADA

As was officially announced, the Cardano Foundation is going to take over stewardship of Project Catalyst from Input Output Global, which could be one of the biggest changes in the Cardano ecosystem in recent years.

Before, IOG, the protocol’s main development company, was in charge of handing out the grants. Catalyst, Cardano’s on-chain funding engine, has supported over 2,200 projects and currently handles over 500 active grants.

How could Catalyst overhaul influence $ADA?

During the transition, team members will move to the foundation to maintain continuity through Fund14. Fund15 and Fund16 have been canceled, and the $ADA allocated to those rounds will go back to the treasury with Intersect.

From a regulatory perspective, if a single commercial entity has a smaller operational role, it supports the idea that Cardano governance is decentralized instead of being directed by one private company. In jurisdictions examining token classification, the difference between development and ecosystem funding is important.

From a financial perspective, giving back unallocated $ADA to the treasury puts a limit on how much of the token will be distributed in the near future through grants. A lot of grantees convert Cardano tokens to fund operations, which adds to the market supply. Pausing two funding rounds changes the internal liquidity cycle.

Finally, strategically, the shift indicates a more strict approach to managing capital. Catalyst has gotten some criticism for supporting a bunch of small projects that do not always have a clear, measurable impact.

The foundation has shown that it is okay with a mix of new ideas coming from the ground up and also being used by big companies and organizations. This suggests that they are going to be more picky about who they accept and keep a closer eye on progress.