Zcash co-founder Sean Bowe has drafted a proposal to end automatic funding for the Zcash Community Grants (ZCG) program, arguing that the grant-making body's treasury — currently valued at roughly $125 million — is already large enough to support developers for years.

Under the draft, ZCG's 8% share of newly issued ZEC would instead be directed to the Network Sustainability Mechanism, a reserve designed to support future mining rewards.

Funding Continues Regardless of Spending Needs

The central concern raised in the proposal is that automatic funding continues regardless of spending needs. ZCG receives approximately 144 ZEC daily — potentially worth more than $68 million annually — while at the same time retaining its existing funds and continuing to award grants.

The proposal would not affect a separate 12% allocation controlled through coinholder voting.

The debate turns on a structural feature of Zcash's funding model: because ZCG's revenue is tied directly to new ZEC issuance, its inflows arrive on a fixed schedule regardless of spending needs, while the treasury it has already accumulated remains in place. How to balance ongoing emission-based grant funding against longer-term network needs — such as sustaining mining rewards — is a recurring governance question for blockchain networks that pay for development out of block rewards.

According to reporting by BitcoinKE, the measure remains a draft and would require a future network upgrade to take effect.

Background: ZCG and Zcash's Development Fund

The Zcash Community Grants program is an independent grant-making initiative that funds third-party teams building wallets, developer tools, and infrastructure for the Zcash ecosystem. Its revenue stream is tied directly to new ZEC issuance, a funding model that dates back to Zcash's first halving in November 2020, when a portion of block rewards was redirected into a development fund to support the protocol's ongoing growth.

Bowe is a cryptographer and one of Zcash's co-founders, known for his research on zero-knowledge proof systems — the cryptographic technology underpinning the network's privacy features.

Zcash launched in October 2016 as a privacy-focused cryptocurrency, enabling users to conduct "shielded" transactions in which the sender, recipient, and transaction amount can be concealed. Its native token, ZEC, is issued through block rewards distributed to miners.

What Happens Next

Because the proposal is still in draft form, ZCG's current funding arrangement remains in place. Any change would need to be incorporated into a future network upgrade, the process by which Zcash's protocol rules are amended. Until any such change is adopted, the points to watch are how the draft evolves through Zcash's governance process, whether it is ultimately included in a network upgrade, and how ZCG continues to award grants from its existing treasury in the meantime.