Cardano Leios 6x scaling test exposes 2029 fee revenue gap

Cardano's Leios testnet hit 26.8 TxkB/s, six times the Praos ceiling, yet the 2029 fee model needs sustained paying traffic the test did not generate.

Input Output, the network's core developer, said the 41-day test produced more than 127,000 blocks and roughly 30,000 Endorser Blocks, with 63 stake pools registered during the phase. The traffic was artificially generated to stress the system rather than produced by users paying to transact.

A cost analysis accompanying the Leios specification models monthly rewards declining 43 percent from a 48 million ADA baseline by 2029, leaving 20.64 million ADA a month to be replaced through transaction fees. Using an average transaction size of 1,500 bytes and a modeled fee of roughly 0.221 ADA, generating that amount requires about 36 transactions per second sustained through a 30-day month.

The gap between technical capacity and economic necessity is the harder problem. At 20 sustained TPS, the model generates about 11.48 million ADA in gross monthly fees — a 9.16 million ADA shortfall against the 2029 target. At 50 TPS, it produces roughly 28.7 million ADA, exceeding the target by 8.06 million ADA.

Capacity creates no revenue by itself

Leios adds parallel capacity through larger Endorser Blocks that carry additional transactions while the underlying Praos chain continues operating. Committees validate those blocks before recording transactions, allowing Cardano to process more activity without replacing its existing security model.

But more available blockspace generates no staking income until somebody pays to use it. Cardano directs 20 percent of its reward pot to the treasury before distributing the remainder to stake pools. To replace 20.64 million ADA after that deduction, the same transaction and fee assumptions require closer to 45 sustained TPS.

The revenue threshold also depends on fee levels. Cutting the average fee in half would require roughly twice as many transactions to generate the same revenue, while raising fees could increase revenue per transaction at the risk of discouraging activity. Ethereum's blob-based fee markets and Solana's low-cost throughput model illustrate the trade-off scaling networks face when pricing blockspace.

Staking becomes an adoption bet

Cardano's staking rewards come from a combination of transaction fees and releases from its remaining ADA reserve. The reserve contribution declines over time, leaving network activity to shoulder more of the cost of rewarding stake pool operators and delegators.

If usage falls short, the pressure moves elsewhere. A smaller pool reward can leave less for delegators after operators take declared costs and margins. Smaller pools with fixed infrastructure expenses could face stronger pressure to accept lower earnings, subsidize operations or consolidate.

Input Output has set a longer-term goal of taking Cardano from roughly 800,000 transactions a month to more than 27 million while becoming economically self-sufficient as reserve funding declines. Leios is the main consensus upgrade intended to provide the capacity for that growth.

The project is now moving into the Water phase of its public testnet, where developers are testing different configurations, a redesigned mempool and production cryptographic keys. Input Output says the goal is to make Leios mainnet-ready by the end of 2026, while acknowledging that delivering a consensus upgrade on that timetable would be unusually fast.

The Dijkstra rollout is planned in two stages. Phase 1 will introduce Nested Transactions and Linear Leios, with developers targeting a mainnet launch by the end of 2026. Phase 2 will add Peras through an intra-era hard fork currently planned for the second quarter of 2027. The moderate-confidence window for the Dijkstra hard fork is Dec. 5, 2026 through Jan. 4, 2027.

For stake pool operators and ADA delegators, the more consequential evidence will come after the capacity tests: sustained network transactions, the fees those transactions actually generate, and how much of the declining reserve contribution they can replace.

This article is for informational purposes only and does not constitute investment advice.