Key Takeaways
- Sean Bowe proposes redirecting ZCG’s 8% block subsidy allocation to Zcash’s Network Sustainability Mechanism.
- The draft preserves ZCG’s existing treasury, the separate 12% coinholder fund, miners’ subsidy formula and ZEC’s supply cap.
- As Zcash turns 10, Grayscale credits protocol-funded research with supporting its privacy upgrades.
Zcash turns 10 on Oct. 28, but its anniversary comes amid a fight over how the privacy network will finance its future.
Co-founder and protocol developer Sean Bowe has submitted a draft proposal to stop directing 8% of block subsidies to Zcash Community Grants (ZCG) and instead withhold that allocation from circulation through the Network Sustainability Mechanism (NSM).
The proposal would preserve ZCG’s existing treasury and the separate 12% Coinholder-Controlled Fund allocation.
It comes as Grayscale credits protocol-funded development with helping Zcash survive market downturns and deliver successive privacy upgrades.
Bowe Says Zcash’s Grants Treasury Has Enough
Bowe’s argument centers on whether ZCG needs automatic funding, given that its accumulated reserves could already support years of grants.
His draft cites dashboard holdings of approximately 91,453 ZEC and $8.8 million, alongside $2.4 million in outstanding grant liabilities. At an assumed ZEC price of $1,300, those net resources would total about $125.3 million.
Using an illustrative annual spending rate of $10 million, the proposal estimates a runway of roughly 12.5 years. At $500 per ZEC, that falls to approximately 5.2 years.
These are scenarios, rather than guaranteed budgets: the draft acknowledges that its dashboard inputs have not been independently reconciled.
The proposal would redirect future payments for the remainder of the funding stream’s existing term. ZCG could continue to approve grants from its treasury, while the miners’ subsidy formula and ZEC’s supply cap would remain unchanged.
No activation height has been assigned, and the draft is not included in NU7 as currently specified.
The Reserve Plan Has Opened a Wider Funding Fight
The NSM is designed to support long-term network sustainability by eventually reissuing value previously withheld from circulation.
Under ZIP 237, that reissuance would supplement scheduled block subsidies while preserving Zcash’s halving structure and supply limit. Redirecting funding into the mechanism, therefore, changes when value enters circulation; it does not permanently eliminate the allocation.
Bowe’s draft is narrower than another proposal circulating on the Zcash community forum. Posted by user maxdesalle, that plan would stop new ZCG grants, honor approved milestones, and transfer the remaining treasury to the NSM.
Bowe said proposals affecting existing assets should be considered separately, although he personally supported further changes.
Developer str4d pushed back against the broader funding cuts, arguing that development and maintenance contribute to chain security alongside mining. The developer also highlighted the gap ahead of NSM distributions, which are expected to begin in 2031.
Josh Swihart proposed a more extensive alternative: retiring both development funding streams and establishing a coinholder-selected legal defense endowment for developers.
The discussion consequently extends beyond treasury size to who should allocate resources and how development would remain financed during a transition.
Grayscale Says Development Funding Helped Zcash Reach 10
The dispute coincides with a Grayscale research note highlighting the benefits of Zcash’s funding model.
Research head Zach Pandl attributed part of the network’s continued innovation to consistent financial support for research and development, including through periods when ZEC underperformed other cryptocurrencies.
He pointed to successive privacy pools: Sprout at launch, Sapling in 2018, Orchard in 2022, and Ironwood in 2026. According to Grayscale, Ironwood addressed a code vulnerability and introduced quantum-recoverable addresses and formal verification.
Pandl argued that scaling transactions, preparing for quantum computing, and confronting AI-powered cybersecurity threats will require continued developer support and efficient allocation of funding.
That leaves Zcash approaching its second decade with an unresolved question: how much automatic funding should continue when existing reserves are substantial, but the work of securing and improving the network remains ongoing?
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Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
