Zcash co-founder Sean Bowe has submitted a draft protocol change that would end the automatic 8% block-subsidy stream flowing to Zcash Community Grants and redirect that value into the Network Sustainability Mechanism. According to Bowe’s draft ZIP, the redirected ZEC would be withheld from immediate issuance and credited to the NSM Value Balance, while ZCG would retain control of the treasury it has already accumulated.
The financial case rests on ZCG’s existing reserves. The draft cites a public dashboard showing 91,452.98 ZEC, $8.80 million in dollar-denominated assets and $2.42 million in outstanding grant liabilities. At Bowe’s illustrative $1,300 ZEC price, those holdings net to approximately $125.3 million, although the proposal itself notes that the underlying dashboard figures have not been independently reconciled.
ZCG Would Keep Its Existing Treasury
Bowe’s proposal is narrower than simply shutting down the grants program. ZCG would continue controlling its current assets and could keep approving grants under existing governance rules, while only future automatic subsidy payments would stop at a yet-to-be-defined activation height. The separate 12% Coinholder-Controlled Fund would retain both its allocation and its existing duration.
At the current subsidy schedule, ZCG receives approximately 144 ZEC per target-spaced day, or 52,560 ZEC annually. At $1,300 per ZEC, Bowe values that flow at about $68.3 million per year, compared with $1.53 million of ZCG expenses reported for Q1 2026. The proposal argues that automatic inflows have grown disproportionately relative to recent spending, particularly as ZEC’s dollar price has increased.
The debate arrives as Zcash prepares for NU7 and its broader issuance changes. NU7 introduces the NSM framework and 25-second target block spacing, but Bowe’s ZCG redirection is explicitly excluded from the currently specified NU7 upgrade and would require a later network activation.
NSM Redirect Raises Development-Funding Debate
The NSM is designed to hold value outside circulating supply and later reissue it through future block subsidies. Under Bowe’s draft, the former ZCG allocation would have no payment address or spending key, preventing miners, grant recipients or another party from immediately claiming the redirected amount.
That structure has nevertheless drawn criticism from developers concerned about future public-goods funding. In the Zcash forum discussion, developer str4d argued that development and maintenance contribute to network security alongside mining and warned that current funding streams expire before NSM reissuance begins around 2031. The disagreement therefore concerns where future development resources should come from, not whether miners immediately receive ZCG’s 8% allocation.
The issue is particularly relevant because ZCG has funded ecosystem initiatives beyond core protocol engineering. A recent $750,000 policy grant supported Zcash-focused federal advocacy, while independent engineering teams have continued delivering improvements such as Zakura’s faster shielded-transaction libraries. Ending automatic ZCG inflows would change one funding channel without determining which projects ultimately continue receiving financing.
Bowe’s draft also leaves Zcash’s 21 million coin cap, historical block validity and existing transaction formats unchanged. The proposal is fundamentally a prospective allocation change: future ZCG subsidy would accumulate inside the NSM instead of a discretionary grants treasury.
For now, the change remains a Draft ZIP with no assigned activation height or reference implementation. ZCG continues receiving its existing 8% allocation until a future network upgrade adopts different consensus rules, leaving the governance debate open while its treasury continues to grow.
