Sean Bowe, a co-founder and protocol developer of Zcash, has put forward a plan to shut off one of the network's main funding channels. On October 26, 2026, Bowe introduced a draft proposal to end the 8% block subsidy stream that currently flows to Zcash Community Grants (ZCG), redirecting that value to the Network Sustainability Mechanism (NSM) reserve, where it would be held out of circulation rather than paid to grant recipients.

What the Proposal Does

Bowe published the idea as a draft ZIP — the Zcash equivalent of a formal improvement proposal — and posted it to the community forum the same day.

The mechanics are fairly direct. Instead of issuing the 8% allocation to grant recipients, the protocol would credit that value to the NSM Value Balance. The research describes this as producing no immediate issuance and no spendable output: the coins are effectively accounted for but parked.

ZCG would not vanish overnight under the plan. The grants body would stop approving new grants while continuing to pay out existing milestones from its treasury. Eventually, whatever remains in that treasury would also be transferred to the NSM.

As a draft ZIP, the plan would still need to clear community review before any such change could land in a future network upgrade.

How Zcash Funding Works Today

Following the NU6 and NU6.1 upgrades, Zcash block rewards are split three ways: miners receive 80%, Zcash Community Grants gets 8%, and the Coinholder-Controlled Fund takes the remaining 12%. That arrangement runs until the network's third halving, which is expected around 2028.

Bowe's proposal targets only the 8% grants slice, leaving the miner share and the coinholder fund untouched.

Block-subsidy-funded grant treasuries are a common fixture across major blockchain ecosystems, and disputes over who controls those flows have become a recurring governance flashpoint across the industry. Zcash's debate sits squarely in that tradition.

The grants committee not exactly short on resources. ZCG holds approximately 91,453 ZEC plus cash, with holdings estimated in a range from tens of millions to more than $100 million. Its spending pace is far more modest: ZCG's expenses for Q1 2026 came to roughly $1.53 million, which annualizes to about $6.1 million.

Why Bowe Is Pushing This Now

The proposal grows out of governance friction. The motivation centers on concerns about how much control coinholders actually have over ZCG allocations. There have also been worries that committee decisions have drifted away from the results of earlier coinholder votes.

The plan sits alongside, but separate from, the upcoming NU7 network upgrade. NU7 is set to activate on approximately November 5, 2026, and is expected to cut block times to 25 seconds and introduce the initial fee-reserve mechanics for the NSM. For observers, that sequencing is worth noting: NU7 would build out the same NSM infrastructure Bowe wants to feed, even though the proposal itself remains a separate decision.

Community Reaction So Far

As of October 27, 2026, the proposal remained in draft status. Reactions have been mixed. Some community members have voiced support, while others — including some supporters — have argued that a change this significant needs a broader debate about its governance implications.

What This Means for ZEC Holders and Builders

For developers who rely on ZCG, the most immediate question is pipeline. Existing milestones would still be honored, but the door to new grants would close, pushing more of the funding conversation toward the Coinholder-Controlled Fund, which keeps its 12% share.

For ZEC holders, redirecting 8% of block subsidies into a reserve held out of circulation means fewer newly issued coins reach the market through grant payouts.

However the debate resolves, it doubles as a live test of how much direct say Zcash coinholders have over the network's treasury flows — the very question at the heart of Bowe's proposal.