Key Notes
- Sean Bowe’s draft would redirect the 8% Zcash grants subsidy to the NSM reserve.
- ZCG would keep its existing treasury and authority to approve new grants.
- The proposal has no activation date and is separate from the poll favoring NSM reissuance in February 2031.
Zcash cryptographic engineer Sean Bowe has proposed ending the automatic block-subsidy payments to Zcash Community Grants and redirecting that 8% allocation to a protocol reserve for future network rewards.
His draft ZIP would preserve ZCG’s existing treasury and its ability to approve further grants. The change concerns future funding: the redirected ZEC would be credited to the Network Sustainability Mechanism, or NSM, without immediately creating spendable coins.
The proposal is dated October 26 and was submitted to Zcash’s improvement-proposal repository on October 27. It remains a draft, with no activation height or reference implementation assigned.
What Happens to the 8% Allocation
The existing funding model allocates 8% of the block subsidy to ZCG and a separate 12% to the Coinholder-Controlled Fund, leaving the miner’s subsidy share unchanged by Bowe’s proposed redirection.
Under the draft, ZCG’s stream would stop at a future activation block. An equivalent stream would then credit the NSM for the remainder of the original funding term, which ends at the third halving. The proposal would not extend that term or change the separate coinholder fund.
At the current subsidy and target block rate, the 8% allocation amounts to approximately 144 ZEC a day, or 52,560 ZEC over a 365-day year. That is a scheduled-rate illustration, rather than a fixed annual commitment. Bowe’s calculations say NU7’s planned move from 75-second to 25-second blocks would leave the daily allocation approximately unchanged because the subsidy per block would be rescaled.
The NSM credit would create no recipient address or spendable output. The draft preserves the existing 21 million ZEC supply ceiling and the formula for calculating miners’ share of a given subsidy.
ZCG Could Keep Making Grants
Bowe argues that the grants program has enough accumulated resources to continue without automatically receiving new ZEC from every block.
The draft cites a dashboard snapshot showing roughly 91,453 ZEC and $8.8 million in dollars, alongside about $2.4 million in outstanding grant liabilities. These are reported inputs cited by the proposal, not independently reconciled current balances. The dashboard reference was dated October 21 and marked as needing updates.
It also cites approximately $1.53 million in ZCG expenses for the first quarter of 2026, equivalent to about $6.12 million if annualized. Its reserve-runway examples depend on assumed ZEC prices and spending levels. They do not establish how many years of grants the treasury will actually finance.
In his forum post, Bowe said changes to ZCG’s existing treasury should be considered separately. His draft leaves that treasury under its existing rules, including the authority to meet commitments and approve new grants. It does not require the program to close or surrender its accumulated assets.
A Reserve for Later Rewards
The NSM’s design accounts for value removed from circulation and reissues it gradually through future block subsidies. The associated fee rules would direct 60% of transaction fees into that mechanism. Bowe’s proposal would add the former ZCG subsidy allocation as a separate source of reserve contributions.
In September’s coinholder poll results, approximately 96.6% of the participating ZEC weight on the timing question favored February 2031 for the start of NSM reissuance. That was a preference about the reserve’s payout schedule, not approval of this new 8% redirection.
Because the reserve is designed to return value to future rewards, the proposed allocation would delay circulation rather than permanently destroy those coins. It would move funding from an immediately spendable grants budget into a longer-term network-support mechanism.
A Separate Network Change Still Needs Review
Bowe explicitly states that the proposal is not included in NU7 as currently specified. It depends on NU7’s accounting rules and would need a subsequent upgrade before the existing grants stream expires.
The trade-off is already being debated. Zcash developer Jack Grigg argued that development and maintenance are part of chain security, and that shifting grant funding into later rewards would reduce resources directed to that work.
Zcash’s governance process uses proposals, discussion and sentiment polling to seek broad agreement. Polls do not automatically change the protocol: developers must implement changes, and network participants must adopt the software.
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