Zcash Draft Proposal Seeks to Terminate ZCG Block Subsidy Allocation

A new draft Zcash Improvement Proposal published on Oct. 26 proposes ending the Zcash Community Grants funding stream and shifting its remaining 8% block subsidy allocation to the Network Sustainability Mechanism ¹. Authored by Sean Bowe, the proposal argues that ZCG has amassed sufficient reserves to support grant disbursements independently of ongoing protocol issuance ¹.

At the time of writing, $ZEC traded at $1,220, up 1.3% over the prior 24 hours. Under the draft ZIP, ZCG's existing assets and grant-making responsibilities remain intact, while the redirected issuance would be withheld from circulation and credited directly to the protocol-level NSM fund balance ¹. The 12% Coinholder-Controlled Fund stream established under ZIP 1016 would persist unchanged ¹.

Treasury Reserves and Issuance Reallocation

According to the draft proposal, public dashboard data shows ZCG holds 91,452.98 $ZEC, approximately $8.8 million in USD, and $2.42 million in outstanding grant commitments ¹. Valued at $1,000 per ZEC, the net balance equates to roughly $97.8 million ¹. The Financial Privacy Foundation reported $1.53 million in ZCG expenditures for the first quarter of 2026, or roughly $6.12 million on an annualized basis ¹. Assuming an illustrative $10 million annual expenditure rate, the current holdings cover between 5.2 and 12.5 years of disbursements across asset prices of $500 to $1,300 per ZEC ¹.

Under Zcash's current 1.5625 ZEC block subsidy and 75-second block interval, the 8% allocation generates 144 ZEC daily, or 52,560 ZEC annually ¹. At a hypothetical price of $1,300 per ZEC, that stream produces about $68.3 million annually—surpassing annualized first-quarter spending by more than elevenfold ¹. Bowe argued that continuing automated inflows into a discretionary treasury unnecessarily magnifies governance and custodial risks ¹.

If approved, the consensus change would activate alongside the scheduled NU7 upgrade, creating a new FS_NSM_H3 stream ending at the third halving boundary without altering the overall supply cap, transaction structures, or miner rewards ¹.