Sean Bowe, a co-founder and protocol developer of Zcash, wants to turn off one of the network’s main funding taps.
On October 26, 2026, Bowe introduced a draft proposal to end the 8% block subsidy stream that currently flows to Zcash Community Grants (ZCG). That value would go instead to the Network Sustainability Mechanism (NSM) reserve, where it would be held out of circulation rather than paid to grant recipients.
What the proposal actually does
Bowe published the idea as a draft ZIP, the Zcash equivalent of a formal improvement proposal. He also 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. It would stop approving new grants and keep paying out existing milestones from its treasury.
Eventually, whatever remains in that treasury would be transferred to the NSM as well.
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.
The grants committee is 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.
This sits alongside, but separate from, the upcoming NU7 network upgrade. NU7 is set to activate on approximately November 5, 2026.
That upgrade is expected to cut block times to 25 seconds and introduce the initial fee-reserve mechanics for the NSM.
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. 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.
That would push 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.
Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.