Cardano's Leios Scaling Upgrade Hits Milestone, but Revenue Generation Remains a Challenge

Cardano's Leios scaling upgrade has made significant progress in increasing throughput, but it still faces challenges in generating enough revenue to support its staking rewards. The latest testnet results show that Leios can process up to 26.8 transaction kilobytes per second (TxkB/s), a sixfold increase from the current Ouroboros Praos system's ceiling of 4.51 TxkB/s.

During the 41-day public test, Leios carried 54% of traffic reaching the chain and processed 18 times the transaction count seen on Cardano mainnet over the comparable period. However, this was achieved with artificially generated traffic, rather than real-world usage.

The economic model of Cardano still relies heavily on reserve contributions, which will decline over time, leaving network activity to shoulder more of the cost of rewarding stake pool operators and delegators. Leios is designed to remove the throughput ceiling that could prevent Cardano from generating enough transaction fees to make this transition.