Sean Bowe, one of the founders and protocol developers of Zcash, has submitted a new proposal to end the automatic funding of Zcash Community Grants (ZCG), which provides grants to projects within the ecosystem.
Bowe, speaking from account X today, argued that the program has sufficient resources to continue its operations. He requested that new payments to ZCG, which receives 8% of the Zcash block subsidy, be channeled into the Network Sustainability Mechanism (NSM).
Bowe stated in his announcement, “It’s time to shut off ZCG’s funding.” He noted that the program wasn’t designed to manage a fund of this size, adding that millions more dollars would be added to the treasury before the change took effect.
In the current funding model, 8% of the block subsidy goes to community grants, and 12% goes to a separate fund managed by the decisions of ZEC holders. Bowe’s proposal targets only the automatic payments to ZCG through these two channels.
The program’s existing assets and authority over previously approved grants will be preserved. ZCG will also be able to continue supporting new projects with the resources in its coffers.
At the heart of Bowe’s financial rationale are the program’s accumulated reserves. The dashboard used in the draft includes approximately 91,453 ZEC, $8.8 million in dollar assets, and $2.4 million in existing grant liabilities.
In a calculation where the ZEC price is assumed to be $1,300, the remaining resources after deducting liabilities amount to approximately $125.3 million. In a scenario where the ZEC is $1,000, the same amount drops to $97.8 million, and in a scenario where it is $500, it falls to $52.1 million.
Therefore, the “$125 million” highlighted in the statements does not refer to a fixed cash balance in the program’s bank account. A significant portion of the reserve consists of ZEC (Zero-Energy Emissions). The draft also notes that the dashboard used requires updating and that the figures have not been independently reconciled.
According to Bowe’s calculations, the current 8% share provides approximately 144 ZEC daily and 52,560 ZEC annually at the targeted block production rate. With a sample price of $1,300 per ZEC, this translates to approximately $68.3 million in additional resources per year.
In contrast, the Financial Privacy Foundation’s first-quarter report stated ZCG expenses were approximately $1.53 million. Assuming the same spending rate continues throughout the year, the annual amount would be approximately $6.12 million. Bowe argues that automated resource input is exceeding the program’s current spending scale.
Under the new plan, the 8% share will be credited to the NSM balance instead of being sent directly to grant recipients as spendable ZEC. The mechanism is designed to re-export this value gradually in the future through block awards, rather than putting it into circulation immediately.
Therefore, transferring to NSM does not produce the same result as permanent token burning. The goal is to redirect resources to rewards that will support network security in the future. Zcash’s 21 million supply cap and halving structure are preserved.
The proposal also sparked a broader funding debate within the community. Maxime Desalle’s separate forum proposal calls for the ZCG to halt new grants and for any remaining funds to be transferred to the NSM after existing obligations are paid. Bowe, however, clarified that his proposal only halted the automatic flow and that any changes to the existing funds should be considered separately.
Josh Swihart, meanwhile, argued that if changes are to be made, not only ZCG but also the 12% coinholder fund should be considered.
Bowe’s proposal is still in draft form. The implementation block height has not been determined, and the change is not included in the current NU7 upgrade. A future network upgrade is required for its implementation. The proposal covers the remainder of the current funding period until the third halving in 2028.
