Cardano’s Leios Upgrade Shows Sixfold Throughput Gains but Raises Economic Challenges

Cardano’s latest consensus upgrade, Leios, demonstrated a six‑fold increase in data‑processing capacity during its public testnet, but the network’s long‑term economic model now faces a tougher hurdle: generating enough transaction fees to replace declining reserve funding.

Technical breakthrough

The testnet recorded a peak throughput of 26.8 transaction kilobytes per second (TxkB/s), compared with the 4.51 TxkB/s ceiling of the existing Ouroboros Praos protocol. Over the 41‑day trial, Leios handled 54 % of total chain traffic and processed 18 times more transactions than Cardano’s mainnet did in a comparable period.

Leios achieves higher capacity by adding parallel “Endorser Blocks” that carry extra transactions while the underlying Praos chain continues to operate. Committees validate these blocks before they are recorded, preserving the network’s security model.

Economic implications

Cardano’s staking rewards are currently funded by transaction fees and a diminishing reserve of ADA. The reserve contribution is expected to fall by about 43 % by 2029, leaving roughly 20.64 million ADA per month to be covered by fees.

Based on a modeled average fee of 0.221 ADA per 1,500‑byte transaction, the network would need to sustain approximately 36 transactions per second (TPS) continuously for a 30‑day month to meet that target. The Leios specification cites a range of 36‑50 TPS as the goal.

If actual usage falls short, the shortfall would affect pool rewards and delegator earnings. For example, at 20 TPS the projected monthly fees would be about 11.5 million ADA—roughly 9.2 million ADA below the target—while 50 TPS would generate about 28.7 million ADA, exceeding the target.

Future outlook

The project is moving into the “Water” phase of testing, which will explore different configurations, a redesigned mempool, and production‑grade cryptographic keys. Input Output aims to have Leios ready for mainnet deployment by the end of 2026, though this timeline is ambitious.

For ADA holders, pool operators, and delegators, the critical question now is whether real‑world transaction demand will fill the newly available blockspace and generate sufficient fees to sustain the network as reserve funding wanes.