For years, every Zcash block has set aside 8% of its subsidy for Zcash Community Grants (ZCG), the program that funds the privacy network’s development. That treasury now holds more than $125 million, and one of the protocol’s own architects has concluded the automatic funding is no longer needed.

On October 26, Zcash co-founder Sean Bowe published a draft Zcash Improvement Proposal titled “Ending the ZCG Funding Stream in Favor of the NSM.” The draft would stop the grants program’s automatic 8% share of each block subsidy and credit that value to the Network Sustainability Mechanism (NSM), a protocol-level reserve defined in ZIP 237, for the rest of the stream’s existing term.

What the treasury holds

The dashboard linked from ZCG’s website reports 91,452.98 ZEC, $8,796,224 in USD and $2,417,165 in outstanding grant liabilities. Valued at three prices, holdings less liabilities come to about $125.3 million at $1,300 per ZEC, $97.8 million at $1,000, and $52.1 million at $500.

That stockpile dwarfs the program’s spending. The Financial Privacy Foundation reported $1,530,844 in ZCG expenses for the first quarter of 2026, roughly $6.12 million annualized. Even at an illustrative $10 million a year, the treasury would cover about 12.5 years of outlays at $1,300 per ZEC, or 5.2 years at $500.

The arithmetic of an automatic stream

The 8% allocation is small as a percentage but relentless in absolute terms. At the current 1.5625 ZEC block subsidy and a 75-second block target, the stream pays 0.125 ZEC per block, or 144 ZEC per day and 52,560 ZEC per year. At $1,300 per ZEC, that is about $187,200 a day, or $68.3 million a year, more than eleven times the annualized first-quarter expense figure.

“A fixed share of issuance increases in dollar value when ZEC appreciates, regardless of the recipient’s existing reserves, spending, or approved commitments,” the draft states. The proposal would add a new accounting stream, FS_NSM_H3, that lasts until the third halving boundary. The redirected value would be withheld from circulation and recorded as a ledger entry in the NSM Value Balance, with no associated address or spending key.

What the proposal leaves alone

The scope is narrow. ZCG keeps every ZEC it already holds and can continue making grants from that balance under its existing rules. The 12% Coinholder-Controlled Fund keeps its allocation and duration. The miner’s share of the subsidy, the 21-million ZEC supply cap, historical block validity and existing transaction formats are all preserved.

There is no activation height in the draft. It would depend on the NU7 network upgrade and a revision to ZIP 214, and a separate deployment ZIP would have to set the exact block before anything changes.

The pushback

The proposal drew criticism quickly. Zcash developer str4d argued in the community forum that miners already take the bulk of the block subsidy and that ongoing development, such as the Zakura Common upgrade that made shielded transactions about 14x faster, matters as much for network security as mining does. Ending the grants stream without a replacement, in that view, would quietly shift funding away from developers. Str4d also flagged a gap: the NSM does not begin paying out until roughly 2031, while the current grants stream ends sooner.

Other forum participants proposed broader alternatives, including sweeping the entire remaining treasury into the NSM or winding down the whole development fund, the 12% coinholder stream included. As of October 27, the draft had no assigned ZIP number and no reference implementation. No vote has settled the question.

Source: BlockchainReporter.