A Pivotal Proposal for Zcash's Treasury

A significant draft proposal has been put forward by Sean Bowe, a Zcash co-founder and core protocol developer. This document suggests a fundamental shift in how the cryptocurrency's block rewards are distributed.

The Core Change: Halting Automatic Community Funding

Under the current system, 8% of every newly minted ZEC block reward is automatically allocated to the Zcash Community Grants program to foster ecosystem growth. Bowe's proposal seeks to end this multi-year practice of automatic funding.

The draft recommends redirecting this 8% portion to a designated Network Sustainability Mechanism pool. Critically, these funds would be accounted for but not released into circulation, preserving ZEC's fixed supply cap and emission schedule.

The Rationale: An "Overcapitalized" Grant Fund

The primary driver for this change is the substantial treasury already accumulated by the grants program. Data cited in the proposal reveals:

  • Substantial Holdings: As of late October, the fund held over 91,000 ZEC and approximately $8.8 million in cash.
  • Pending Commitments: An additional $2.4 million in approved but unfulfilled grant commitments.
  • Significant Valuation: With ZEC priced around $1,300, the fund's net worth was estimated at roughly $125 million.

This stands in stark contrast to its expenditure rate. The fund's budget for Q1 2026 projects spending of only about $1.53 million. Meanwhile, the 8% automatic allocation adds nearly 52,560 ZEC annually—worth around $68 million at current prices—creating a large surplus.

Implications if the Proposal is Adopted

Should this draft eventually achieve community consensus and be implemented via a network upgrade, the following would occur:

  • The Community Grants program would retain all its existing funds and complete payments for all currently approved grants.
  • However, the flow of new block rewards into the fund would cease from a specified future block height.
  • The allocations for miners (80%) and the holder-controlled fund (12%) would remain unchanged, as would ZEC's total supply cap.

Current Status and Path Forward

It is crucial to note that this is currently only a discussion draft. It has not yet been assigned a formal ZIP number or a specific activation block height. Therefore, it is excluded from the upcoming NU7 upgrade scheduled for November 5.

Any modification to the core reward distribution is a major decision. It must undergo thorough community debate, technical refinement, and be enacted via a separate future network upgrade. The conversation about how Zcash's resources are best allocated is now officially open.