Zcash Co-Founder Proposes Ending Grants Funding Stream

Zcash co-founder Sean Bowe has proposed ending the automatic allocation of 8% of newly created ZEC to Zcash Community Grants, arguing the program's treasury is large enough to fund years of spending without further protocol inflows. Bowe published a draft ZIP on Oct. 26 on a branch of the zcash/zips repository.

"It's time to turn off the ZCG funding stream," Bowe wrote on X, as quoted by CoinDesk. "ZCG has over $125M in funding, and will receive millions more before the spigot is turned off. The program was never designed to handle this amount of funding."

The draft, titled "Ending the ZCG Funding Stream in Favor of the NSM," would redirect the remaining 8% share of the block subsidy to the Network Sustainability Mechanism for the rest of the stream's existing term. The NSM is a protocol-defined mechanism designed to support future mining rewards. ZCG would keep the assets it already holds and continue awarding grants from that treasury. The separate 12% Coinholder-Controlled Fund stream would be unchanged, according to the draft ZIP. The ZEC supply cap, historical block validity and existing transaction formats are preserved.

Bowe's valuation rests on the grants program's public dashboard, which recorded 91,452.98 ZEC and about $8.8 million in USD holdings against roughly $2.4 million in outstanding grant liabilities. Using an illustrative ZEC price of $1,300, the ZIP puts the net treasury near $125.3 million. At $1,000 per coin the figure is about $97.8 million, and at $500 it falls to roughly $52.1 million, still about five years of spending at an assumed $10 million annual budget. The valuations exclude future funding-stream receipts.

The Financial Privacy Foundation, which administers ZCG funds, reported just over $1.5 million in program expenses for the first quarter of 2026, or about $6.1 million annualized, the ZIP notes. Meanwhile the 8% allocation delivers about 144 ZEC per target-spaced day, worth roughly $68 million a year at $1,300 per ZEC, CoinDesk reported. That yearly inflow is more than eleven times the annualized first-quarter expense figure.

The proposal arrived amid public criticism of a ZCG-funded outreach program that demonstrated private payments at an adult-industry convention. The team behind that program, ZECsy, requested $550,000 for work at adult-industry events, crypto conferences and workshops. The pitch included helping workers facing banking restrictions accept payments without exposing personal financial information. The committee approved startup funding and the first nine milestones, totaling about $461,500, with one member opposing the grant over cost and questions about lasting adoption. Bowe's draft does not cite that grant and rests on reserves and inflows.

ZCG's five-member committee, elected by a community advisory panel, selects grants without a separate coinholder vote. A second funding program receives 12% of newly created ZEC, and holders vote quarterly on its grants subject to participation and approval requirements. Bowe wants to preserve that larger allocation while ending the automatic ZCG stream, arguing that continuing to pile funds into separate custody and governance arrangements adds risk when the program already holds substantial reserves.

The redirected allocation would enter the Network Sustainability Mechanism and remain there for the rest of the grants stream's existing term. Under the draft, contributions are withheld from issuance and credited directly to the NSM fund; their later treatment, including any reissuance, stays governed by the NSM specification in ZIP 237.

The ZIP has no activation date and would require a change to Zcash's network rules. Until such a change takes effect, ZCG's allocation continues at about 144 ZEC a day. The draft states that the change takes effect only at a chosen activation height under a future network upgrade, with historical blocks continuing to validate under existing rules.