A proposal published on October 30 by Sean Bowe of Tachyon Group and Zooko Wilcox and Jason McGee of Shielded Labs would cut off the funding stream that currently flows to Zcash Community Grants (ZCG), locking it inside a new Future Dev and Legal Defense Fund Lockbox until a separate governance decision defines how it can be spent. As of October 31, the October 30 proposal remained an open, unimplemented draft.

Under the draft, ZCG — which currently receives 8% of every block subsidy — would stop receiving that share. Instead, the stream would accumulate in the lockbox, which has no custodian, no spending key and no withdrawal process. Opening it would require a separate Zcash Improvement Proposal (ZIP), meaning that despite its name, the fund offers no route today to hire lawyers or pay developers.

ZCG would keep its existing treasury, minus a 50,000 ZEC contribution toward future network rewards — a sum worth roughly $62 million at the October 30 price. The existing pot remains spendable now: a five-seat committee approves grants, and the Financial Privacy Foundation (FPF) pays them out. Under Zcash's current grants rules, committee decisions do not need ordinary sign-off from FPF's board, though the foundation keeps a veto for specific legal and reporting duties. The lockbox, by contrast, has no rules for spending at all.

In his forum announcement, Wilcox argues that the treasury has grown too large as ZEC appreciated, and that future funding should end while the program keeps the means to operate. For grant applicants, that means the committee can still fund work from what it holds, but renewal of any particular project is not guaranteed.

The stream the lockbox would capture

The stream the draft would capture is not small. Since the 2024 halving, the block subsidy has been 1.5625 ZEC. At 75-second blocks, ZCG's 8% works out to about 144 ZEC a day, or roughly 52,600 ZEC a year — about $65 million at ZEC's price of around $1,240 on October 30. Under the draft, those funds would accumulate untouched until the third halving, expected in 2028. Because that 8% share is written into the network's issuance rules rather than set by an annual budget, redirecting it is an upgrade-level decision, not a line item anyone can strike.

How long the remaining treasury lasts depends on ZEC

The full draft lists about 91,453 ZEC and $8.8 million in dollar holdings, against $2.4 million in outstanding grant liabilities. After the 50,000 ZEC contribution, roughly 41,453 ZEC would remain alongside the dollars.

On spending, FPF's second-quarter report shows about $1.5 million of ZCG expenses in the first quarter and $3.2 million in the second, including grants, discretionary spending and compensation. Doubling that first half gives an annual rate of about $9.4 million. Applied to the remaining holdings:

The projections use the annualized first-half spending rate and assume no new income, returns, obligations or conversion costs. They are not a price forecast.

Two caveats sit under those numbers. The authors say the treasury dashboard they used — accessed October 26 and referencing an October 21 block — was marked "Updates required," and they describe the figures as unreconciled. Second-quarter spending also ran well above the first quarter's, mostly on discretionary items, so the annualized rate is a reference point rather than a set budget. Price matters most: a halving or a 50% rise in ZEC moves the runway by roughly three years either way.

Where the 50,000 ZEC goes

The two parts of the draft affect supply differently. The lockbox stream stays as issued ZEC; it simply cannot be spent. The 50,000 ZEC contribution, by contrast, leaves issued supply and is credited to the Network Sustainability Mechanism's (NSM) balance, which under ZIP 237 feeds back into future block subsidies. The donated coins themselves become unspendable, but their value returns to circulation over time through mining rewards, so calling it a permanent 50,000 ZEC burn would be wrong.

This draft would be one of the first large contributions into that mechanism. Coindoo has previously covered how the NSM fits into the NU7 upgrade set for November 5 and why coinholders chose to keep the halving schedule.

The steps would not happen at once:

• Community acceptance of the proposal
• Within 30 days: the 50,000 ZEC is sent; no upgrade is needed, and the transfer cannot be reversed
• A later upgrade after NU7: the 8% stream is redirected, and the donation is credited to the NSM
• A future ZIP: rules for ever spending from the lockbox

Of the four steps, only the 50,000 ZEC transfer carries a timeline — within 30 days of community acceptance. The redirect rides on an upgrade after NU7, the release set targeted for November 5, and the lockbox stays sealed until some future ZIP defines a way in.

The grants committee's own plan

ZCG has proposed something gentler. Its October 29 outline would taper funding instead of locking it. Both plans respond to the same diagnosis — a treasury that has grown faster than the program spends — but they diverge on the remedy: slow the inflow and keep spending it, or seal it away until new rules exist.

The contributions differ by about 13,800 ZEC, roughly $17 million at current prices. The bigger difference is control: ZCG's plan keeps a shrinking stream flowing to the people who spend it today, while the joint draft parks the stream until Zcash agrees on who can open the lockbox. A reconciled treasury statement would show exactly how much each side is arguing over.

What happens next turns on decisions that have not yet been made: whether the community accepts the founders' draft, ZCG's taper, a blend of the two, or neither — and whether any future ZIP ever gives the lockbox a way out.

This article is provided for informational purposes only and does not constitute financial or investment advice.

Source: Coindoo