Sean Bowe, a co-founder of Zcash, wants to end the funding stream that pays Zcash Community Grants (ZCG) 8% of every block subsidy, and sending that share to the Network Sustainability Mechanism (NSM) instead. The draft Zcash Improvement Proposal, opened on GitHub at 02:39 UTC on Tuesday, has no ZIP number or activation height yet.
The block subsidy is the new ZEC created with each block. Part of it goes to miners and part to so-called funding streams, fixed shares set aside for development and grants. The NSM, defined in ZIP 237, is a protocol-run reserve that holds coins back from issuance so they can be paid out through future block rewards.
Under the draft, the 8% would be withheld from issuance and credited to the NSM fund, with no payment to any address. The miners’ share would not change. The redirection would run until the stream’s existing end point, and the separate 12% Coinholder-Controlled Fund, whose grants holders vote on, would keep its allocation and term.
The draft puts ZCG’s holdings, less grant commitments, at $125.3 million at an illustrative ZEC price of $1,300, and $52.1 million at $500. Those figures come from ZCG’s public dashboard, which listed 91,452.98 ZEC, $8,796,224 in dollars and $2,417,165 in outstanding grant liabilities. The draft notes the figures “have not been independently reconciled”.
For scale, the draft cites $1,530,844 in ZCG expenses for the first quarter, as reported by the Financial Privacy Foundation, or about $6.12 million a year. The stream itself adds 144 ZEC a day. At Tuesday’s price that is about $180,400 a day, by our arithmetic.
“ZCG has over $125M in funding, and will receive millions more before the spigot is turned off. The program was never designed to handle this amount of funding,” Bowe wrote on X.
Why it matters: Zcash’s development money is decided by funding rules written into the protocol, so changing who gets paid is a consensus change. Every node would have to run new software at an agreed height, the same process now under way for block 3,543,405 for NU7.
How ZCG spends
ZCG is run by a five-member committee elected by a community advisory panel, and it picks grants without a separate coinholder vote, CoinDesk reported.
The draft arrived as one ZCG grant drew criticism online, according to CoinDesk. The team behind it, ZECsy, requested $550,000 for outreach at adult-industry events, crypto conferences and workshops, and the committee approved startup funding and nine milestones worth about $461,500 in a split August decision.
Bowe’s draft does not mention the grant, CoinDesk noted. Cointelegraph also reported the proposal.
The draft has no comments from ZIP editors yet.
ZEC was trading at $1,252.63 at about 10:49 UTC, up about 1.8% from the UTC-day open, according to Kraken. The next step is review by the ZIP editors; a separate deployment ZIP would have to set the activation height.
This article is for information only and is not investment advice.