Zcash Funding Showdown: Cut ZCG Now—or Retire the Whole Dev Fund
Sean Bowe has drafted a Zcash Improvement Proposal (ZIP) to disable the automatic Zcash Community Grants (ZCG) funding stream and redirect an 8% block subsidy to the Network Sustainability Mechanism (NSM). Zcash Open Development Lab (ZODL) founder Josh Swihart opposes stopping at ZCG, urging a full retirement of all development-fund streams instead.
What Bowe’s draft would do
In his post and draft ZIP, Bowe argues the ZCG “was never designed to handle this amount of funding” and now holds significant resources. According to the proposal, ZCG has approximately 91,453 ZEC and $8.8 million in cash against $2.4 million in outstanding grant liabilities. At a hypothetical ZEC price of $1,300, the net resources would be worth about $125.3 million—enough, the draft argues, to support more than 12 years of grants at $10 million annually without new automatic allocations.
Bowe’s draft would end ZCG’s automatic stream (roughly 52,560 ZEC per year) and credit the 8% block subsidy to the NSM, where it would be withheld from immediate circulation and governed by existing rules for potential future issuance. ZCG would keep its current treasury and continue awarding grants. The separate 12% coinholder-controlled fund allocation would remain unchanged. The draft also says the change preserves Zcash’s maximum supply, existing transaction formats, and miners’ proportional share of block subsidies.
The proposal remains a draft. It has not been approved, is not scheduled for activation, is not included in Network Upgrade 7 (NU7), and would require a subsequent upgrade. No reference implementation or activation date has been set.
Swihart’s counter: end both streams, one exception
Swihart warned that ending ZCG alone would be a “half measure,” arguing it would “fuel community division and market uncertainty.” “It’d be a mistake to kill only one part of the dev fund,” he wrote in response to Bowe’s post. “If dissolved, then no half measures, dissolve it all, both the ZCG and coinholder streams. The coinholder stream accrues ~216 ZEC a day until the halving. Same problem.”
He said ZCG was designed to balance governance and incubate speculative ideas, while coinholder grants acted as a temporary bridge when funding was scarce. Because “markets like certainty,” Swihart urged redirecting both ZCG and coinholder streams to the NSM through the upcoming halving while honoring all previously approved ZCG grants. As a single exception, he proposed a one-time, coinholder-voted endowment for a legal defense fund to protect Zcash developers.
Swihart also acknowledged that his own company, ZODL—which recently received a retroactive coinholder grant for core protocol work—would lose access to a key funding source if all streams were retired. The source text additionally states that ZODL has raised more than $25 million in seed funding from major crypto investors, though the excerpt provided is truncated.
The money at stake
Bowe contends that continuing the existing ZCG allocation would unnecessarily concentrate more resources under ZCG’s control, given its current holdings and projected runway. Under his draft, the 8% subsidy would be credited to the NSM instead, with issuance rules unchanged from current NSM design.
What changes now? Not yet
Nothing in the draft is final. Approval, implementation details, and timing remain open; any change would require a future network upgrade after NU7.