Zcash co-founder Sean Bowe has submitted a draft Zcash Improvement Proposal (ZIP) to terminate the 8% block reward allocation currently directed to Zcash Community Grants (ZCG), citing that the grant body already holds over $125 million in funding.
Treasury Scale and Allocation Stream
According to a dashboard referenced in Bowe's proposal, ZCG held 91,453 ZEC and $8.8 million in cash as of an October 21 block, against $2.4 million in approved but unpaid grants. Valuing ZEC at $1,300, Bowe estimated the program's balance at $125.3 million.
Under current rules, ZCG is scheduled to receive an additional 110,049 ZEC before its funding stream expires on November 24, 2028. At a dashboard price of $1,241.61 per coin, those future allocations are valued at $136.6 million. The stream generates 144 ZEC daily, equivalent to $68.3 million annually. A report from the Financial Privacy Foundation indicated that ZCG spent $1.53 million in the first quarter of 2026. The proposal comes amid ongoing governance discussions following recent volatility detailed in Zcash's market activity.
Community Debates and Counterproposals
Bowe’s draft ZIP directs future emissions away from ZCG and into the Network Sustainability Mechanism (NSM), which holds coins from issuance until payouts resume as block rewards in February 2031. Bowe noted that ZCG would retain its current treasury to approve future grants.
Other community members presented alternative measures on the Zcash forum. Community member Maxime Desalle suggested transferring ZCG's existing treasury to the NSM as well. Desalle pointed to a February vote in which 98.6% of voters opposed Zcash Shielded Assets on 7.25% turnout, despite ZCG approving $455,000 in June for a QEDIT test network covering deferred features.
Josh Swihart, CEO of Zcash Open Development Lab (ZODL), stated that ending only ZCG's share would be a mistake, recommending the termination of the 12% Coinholder-Controlled Fund, which collects about 216 ZEC daily. Zcash founding scientist Ian Miers raised concerns regarding the NSM destination, warning that reserve funds pay miners and could be redirected later. Bowe clarified that the draft is not part of Network Upgrade 7 (NU7), which activates on mainnet on November 5, and will require a subsequent upgrade.
Key Takeaways
- Sean Bowe proposed ending ZCG's 8% block reward stream and redirecting it to the NSM.
- ZCG holds 91,453 ZEC and $8.8 million in cash with $2.4 million in unpaid grants.
- An additional 110,049 ZEC ($136.6M) is scheduled for distribution to ZCG through November 24, 2028.
- ZODL CEO Josh Swihart advocated closing the 12% Coinholder-Controlled Fund collecting 216 ZEC daily.
Why It Matters
The proposal highlights growing scrutiny over crypto developer treasuries when token value appreciation significantly outpaces operational spending. Diverting issuance to the Network Sustainability Mechanism recalibrates Zcash's long-term tokenomics toward security incentives rather than capital accumulation. As governance participants debate these changes following NU7, the resolution will set a major precedent for privacy coin developer funding.
