For the sixth installment of the Cardano R&D Sessions, Input | Output Research (IOR) went on the road and co-hosted an SPO-led X Space organized by community manager Matthew Capps. Following introductions, Director of Research Partnerships, Fergie Miller, outlined how IOR’s five-year research program, Cardano Vision, delivers direct, long-term value to SPOs.
Strengthening the security foundations on which their operations depend. Research streams such as Post-Quantum Landscape and Byzantine-Resilient Networking prepare the network for emerging adversarial models, ensuring that stake keys, slot leader election processes, and node communication remain secure even under quantum-capable adversaries. Additional work on location-aware deployment further enhances network resilience, reducing regional failure risk and improving reliability for operators and delegators.
Scalability initiatives expand SPO capabilities beyond traditional block production. Technologies such as Ouroboros Leios, decentralized storage, sharding, and Minotaur’s multi-resource consensus create new participation paths and potential revenue streams. These developments reduce operational overhead, increase transaction capacity, and enable operators to specialize or serve multiple ecosystems without duplicating infrastructure, positioning SPOs as critical service providers in a more modular and interoperable network.
Economic and tokenomic research supports sustainable operator business models by reducing reward volatility and enabling predictable income structures. Improvements in reward sharing, congestion control, and fee markets provide clearer incentives aligned to real network usage, while partner chain economics and restaking frameworks allow SPOs to capture value across multiple execution environments. Together, these initiatives evolve SPOs from passive network maintainers into active economic participants benefiting from increased activity and demand.
Governance enhancements ensure SPOs retain meaningful influence over Cardano’s direction. Lightweight voting protocols, identity-anchored participation mechanisms, and analytical tooling make governance more efficient, accountable, and evidence-based. By lowering the cost of participation and increasing the quality of decision-making inputs, Cardano Vision positions SPOs not only as infrastructure operators but as core stewards of the network’s technical, economic, and policy evolution.The X Space then moved into a discussion format with researchers and SPOs discussing four research streams in-depth to improve mutual understanding, whilst highlighting shared challenges and potential opportunities through improved collaboration.
Preparing for post-quantum readiness
Cardano’s cryptographic foundations are secure against classical adversaries, but quantum-capable attackers pose a theoretical threat to the primitives underpinning leader election and consensus. Senior research fellow Alexander Russell explained that transitioning to post-quantum cryptography is not a parameter update or routine optimization. It represents a structural change to core components such as Verifiable Random Functions (VRFs). These transformations will alter block validation time and node resource requirements, and – critically – will not be backward compatible with existing chain history.
Russell noted that the introduction of quantum-resistant primitives ‘would require that chain verification uses different conventions for blocks created after a particular slot number,’ formalizing the need for a true architectural hard fork. Although most estimates place scalable quantum computing about 5–10 years in the future, security planning must adopt the earliest credible projection. Given the time required to design, test, and deploy new primitives across a decentralized ecosystem, research work in this area is proceeding under a five-year assumption.
This research direction underscores a broader reality: long-term protocol security depends on evolving cryptographic assumptions faster than potential adversaries.
Leios and new economic dynamics
Leios is widely understood as Cardano’s scalability strategy, enabling higher throughput without compromising decentralization. However, as researcher Georgios Panagiotakos demonstrated, the implications extend beyond performance. In the envisioned full Leios model, nodes are required to send additional consensus participation messages – creating measurable actions at greater frequency than block production alone.
The introduction of more granular participation metrics has economic consequences. Today, SPO rewards are tied predominantly to block creation, which introduces high variance for smaller operators. In a high-throughput environment with frequent participation signals, reward distribution could be anchored to consistent protocol activity rather than probabilistic block assignment. This would reduce variance in operator income, enhance economic resilience of smaller pools, and strengthen decentralization by lowering dependence on ‘luck’ in slot allocation.
In parallel, increased throughput and elevated transaction volume create the potential for higher aggregate fee income over time. Leios, therefore, is not solely a performance upgrade. It is a restructuring of how the network measures and rewards contributions.
A decentralized storage layer
As throughput increases and layer 2 protocols proliferate, data availability emerges as a core scalability bottleneck. Research fellow Sandro Coretti-Drayton presented work on a decentralized storage layer designed to provide Byzantine-resilient guarantees comparable to the consensus layer. This development introduces the possibility of a distinct operational role: the storage provider.
Unlike SPOs, such providers would not be required to perform consensus validation. Instead, they would specialize in storing verifiable data required by higher-layer protocols. Researcher Paulo clarified that this is not merely a technical optimization but an anticipated economic specialization. Optional participation could create an additional revenue stream tied to data services, broadening the network’s operational base without forcing all participants into consensus roles.
The key research challenge lies in establishing incentive mechanisms and proofs of correct data retention. Once solved, Cardano could support differentiated operator types – consensus providers and storage providers – each contributing distinct services within a unified economic framework.
Network growth requires incentive alignment
While performance improvements and additional roles may strengthen the network, usage remains the primary driver of long-term value. Community discussions highlighted a structural misalignment: users treat ada as an appreciating asset, disincentivizing on-chain spending. This suppresses activity metrics essential to ecosystem development, including transaction volume, DApp usage, and fee-driven sustainability.
Given that block production is already subsidized through reserve-based rewards, unused block space represents an inefficiency that could be repurposed. The session examined whether temporary subsidy mechanisms or alternative fee models could stimulate network activity during low-utilization phases. However, designing such systems using a single token introduces considerable economic risk. Research into dual token architectures, such as Midnight’s NIGHT and DUST model, reflects efforts to explore more flexible incentive frameworks.
As IOR emphasized, Cardano’s high assurance approach requires considered experimentation. Any modification to fee dynamics requires rigorous modeling and ecosystem coordination, underscoring that the most difficult challenges ahead are economic rather than cryptographic.
Conclusion: coordinating research trajectories and economic realities
The discussion demonstrated that Cardano’s next evolutionary phase is characterized not only by advanced cryptography and novel protocol mechanisms, but also by the need to harmonize research objectives with operator incentives. Emerging workstreams – from quantum resistance and Leios economics to decentralized storage – will reshape both the network’s technical architecture and its economic configuration.
Ensuring that operators can sustainably participate in, and economically benefit from, these innovations will determine how effectively research transitions into deployment. Cardano’s long-term success depends on this alignment: robust scientific foundations coupled with viable, incentive-compatible market structures.
As the network advances through its evidence-based evolution, continued collaboration between research teams and operators will be critical. The protocol’s maturation will be measured not solely by theoretical breakthroughs, but by their translation into operational systems that demonstrably sustain decentralization, performance, and economic viability.
Cardano R&D sessions continue on the first Tuesday of each month, bringing together researchers, engineers, and ecosystem contributors to explore the technologies shaping Cardano’s long-term future.
