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On October 27, 2026, Zcash co-founder Sean Bowe <a style="color: #0000ff;" href="https://x.com/ebfull/status/2114911107718742451" rel="noopener noreferrer nofollow">introduced</a> a Zcash Improvement Proposal (ZIP) to stop the automatic allocation of 8% of block rewards to the Zcash Community Grants program.
The current system sends approximately 144 newly minted ZEC to the grants treasury every day. Bowe argues the program wasn’t designed to manage such a large amount of money. Its uncommitted treasury has grown to approximately 91,450 ZEC, worth around $125 million.
<blockquote class="twitter-tweet">
 It’s time to turn off the ZCG funding stream.
 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.
 Draft ZIP:
 https://t.co/GAkRBeplwO
 — Sean Bowe (@ebfull) <a href="https://x.com/ebfull/status/2114911107718742451?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 27, 2026</a>
</blockquote>
Under the proposal, the 8% allocation would instead go to the Network Sustainability Mechanism. This reserve is designed to keep tokens out of circulation and gradually return them to the network as future mining rewards.
The proposal would only stop the daily flow of new funds into the grants program. The existing five-member grants committee would retain full control over the $125 million already held in the treasury to support future ecosystem projects.
According to Bowe’s calculations, the existing funds could support $10 million in annual developer spending for the next five years, even if ZEC’s price fell to $500.
Read also: <a style="color: #0000ff;" href="https://defi-planet.com/2026/09/zcash-rally-faces-scrutiny-as-f2pool-co-founder-questions-its-1000-valuation/" rel="noopener noreferrer nofollow">Zcash Rally Faces Scrutiny as F2Pool Co-Founder Questions Its $1,000 Valuation</a>
<h3 id="span-style-font-weight-400-ending-continuous-funding-to-encourage-sustainable-development-span">Ending continuous funding to encourage sustainable development</h3>
The accumulation of block rewards has raised concerns about how efficiently Zcash uses its capital. The grants program receives millions of dollars in funding but has historically spent only a fraction of the money available. This leaves large amounts of capital unused while creating concerns about future inflation and potential selling pressure if treasury funds enter the market.
Continuous block subsidies can reduce the pressure on developers to build businesses that support themselves financially. If developers can repeatedly apply for grants to cover their expenses, they may have less incentive to create products that attract paying users.
X user Duelamco <a style="color: #0000ff;" href="https://x.com/deulamco/status/2115039599890489856" rel="noopener noreferrer nofollow">argued</a> that developers should eventually stop depending on initial grant funding and generate revenue directly from users who adopt their applications.
<blockquote class="twitter-tweet">
 @ebfull Isn’t that simple as builder should earn from what people spent $ZEC on, like their Apps after bootstrapping with the initial fund ?
 — deulamco (@deulamco) <a href="https://x.com/deulamco/status/2115039599890489856?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 27, 2026</a>
</blockquote>
By ending the automatic flow of new funds into the grants treasury, the proposal could encourage developers to focus on products that generate genuine demand rather than relying on a committee to approve continued funding.
You may also like: <a style="color: #0000ff;" href="https://defi-planet.com/2026/09/dragonfly-partner-calls-for-zcash-development-fund-to-end-in-2028/" rel="noopener noreferrer nofollow">Dragonfly Partner Calls for Zcash Development Fund to End in 2028</a>
<h3 id="span-style-font-weight-400-treasury-control-raises-questions-about-governance-and-accountability-span">Treasury control raises questions about governance and accountability</h3>
The size of Zcash’s grants treasury also raises governance concerns. The five-member committee controls more than $125 million in public goods funding without requiring individual coinholders to approve each project allocation directly.
As the treasury grows, this concentration of financial power could make funding decisions increasingly political. Controversial decisions, including sponsoring an adult industry convention, have already drawn attention to how the committee uses the funds.
However, not everyone supports ending the subsidy.
An X user, Beyond Logic, <a style="color: #0000ff;" href="https://x.com/beyondlogic34/status/2114928127420096984" rel="noopener noreferrer nofollow">opposed</a> Bowe’s proposal, arguing that generous subsidies provide strong incentives for creators. The user suggested introducing a system in which coinholders directly vote on how 20% of the funds are allocated.
<blockquote class="twitter-tweet">
 @ebfull I disagree. It’s motivating developers and creators. At most you can turn off the 8% and give 20% coin holder vote
 — So close, Don’t stop (@beyondlogic34) <a href="https://x.com/beyondlogic34/status/2114928127420096984?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 27, 2026</a>
</blockquote>
This response highlights a central disagreement within the community: whether the problem is the amount of money being distributed or the way decisions about that money are made.
Introducing direct coinholder voting could give the community more influence over spending. However, such a system would also introduce technical and political challenges, including how voting rights would be distributed and how competing funding priorities would be resolved.
Another user, Kyle, <a style="color: #0000ff;" href="https://x.com/PryvitKyle/status/2115009184785961065" rel="noopener noreferrer nofollow">supported</a> the current proposal. Kyle argued that it preserves a substantial financial runway for development while making Zcash’s economic structure more attractive to new network participants.
<blockquote class="twitter-tweet">
 This seems like a reasonable proposal. On one hand it still allows a significant dev fund to exist for a few years to come while also allowing for a solution that makes a decent number of newcomers happier and wanting to stay within the community
 — Kyle DH | pryvit.eth (@PryvitKyle) <a href="https://x.com/PryvitKyle/status/2115009184785961065?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">October 27, 2026</a>
</blockquote>
Redirecting the subsidy to the Network Sustainability Mechanism could offer a middle ground. Rather than removing funds already available to developers, the proposal would stop the treasury from growing automatically and reduce pressure from an increasingly large grant pool.
The existing reserves would remain available for ecosystem development, while future block rewards would support the network’s sustainability mechanism instead of continuously expanding the grants treasury.
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The post <a rel="noopener noreferrer nofollow" href="https://defi-planet.com/2026/10/zcash-proposes-ending-8-grant-subsidy-redirecting-funds-to-reserve/">Zcash Proposes Ending 8% Grant Subsidy, Redirecting Funds to Reserve</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://defi-planet.com">DeFi Planet</a>.

Zcash Proposes Ending 8% Grant Subsidy, Redirecting Funds to Reserve

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