Zcash co-founder Sean Bowe has published a draft proposal that would end Zcash Community Grants’ automatic 8% block-subsidy allocation and redirect those future funds to the Network Sustainability Mechanism. The unassigned ZIP, created on October 26, remains in Draft status and has no assigned Mainnet or Testnet activation height.
The proposal would preserve ZCG’s existing treasury and the separate 12% Coinholder-Controlled Fund allocation. It would also leave Zcash’s maximum supply, historical block validity, existing transaction formats, and transaction privacy properties unchanged. Instead of annual automatic inflows, ZCG would continue making awards from assets already accumulated.
According to the draft, ZCG holds 91,452.98 ZEC and $8.8 million in cash, with $2.4 million in outstanding grant liabilities. At an illustrative ZEC price of $1,300, those holdings are valued at $125.3 million net of liabilities, falling to $97.8 million at $1,000 and $52.1 million at $500. Bowe argues this is sufficient for continued grant-making, especially compared with annualized first-quarter 2026 ZCG expenses of $6.12 million.
Under current parameters, the 8% stream represents about 144 ZEC per target-spaced day, or 52,560 ZEC annually. At the proposal’s illustrative $1,300 price, that equals roughly $68.3 million per year, more than eleven times ZCG’s annualized first-quarter spending. The draft would redirect that future allocation to the NSM fund for the remainder of the stream’s existing term rather than changing the miner subsidy formula.
The NSM is designed to reserve value that can later support block rewards. NU7 already directs 60% of transaction fees into the NSM while miners keep 40%, alongside the shift to 25-second blocks. Bowe’s proposal would add the former ZCG subsidy stream to that reserve but is not part of NU7 and would require a later network upgrade that activates before the existing ZCG stream expires.
The funding debate comes amid renewed attention on privacy-focused assets. Zcash recorded 62,375 shielded transactions in the week ending September 24, its highest weekly count since 2022. In March, the Zcash Open Development Lab secured $25 million in seed funding from investors including Paradigm, a16z crypto, Winklevoss Capital and Coinbase Ventures. Grayscale converted its Zcash Trust into the ZCSH spot exchange-traded fund on NYSE Arca on August 25, and the fund surpassed $500 million in assets under management within two weeks.
Technically, ZEC has broken above a descending resistance line and rebounded from the lower end of its support zone. The chart projects a potential move toward $1,368, with an Accumulation/Distribution weighted volume reading of 37.19 million pointing to growing buying pressure. Further gains would depend on sustained accumulation and continued buying activity.
