Zcash co-founder proposes ending grants funding, citing $125 million treasury

Zcash's Network Sustainability Mechanism, created by ZIP 237, replaced the earlier Founders' Reward that expired at the 2020 halving, splitting new ZEC issuance between miners and ecosystem funding through Zcash Community Grants (ZCG). That 8% subsidy was built to pay for development without taxation or token sales, settling years of debate over how to fund work once the original Founders' Reward lapsed. Bowe's draft ZIP reopens that settlement, four years after it took effect.

If adopted, ZCG stops receiving new ZEC but keeps spending down its existing balance of over $125 million, so currently funded projects face no immediate cut. The diverted 8% instead accumulates in the Network Sustainability Mechanism reserve for future mining rewards rather than being paid out now, effectively favoring miners later in the issuance schedule over grant recipients today. ZCG must now budget like an endowment drawing down a fixed sum rather than counting on perpetual new issuance.

Beyond Zcash, this tests whether a community grants committee should hold a permanent claim on new coin issuance or run down a one-time balance like an endowment. A rival forum proposal goes further, seeking to sweep ZCG's already-held treasury into the same reserve, raising the question of whether a committee's past allocations stay its own once the headline figure becomes public. Each time one contributor's draft can redirect tens of millions in future issuance, Zcash's claim to decentralized governance gets tested.

Resolution runs through Zcash's ZIP review process, where ZCG and the wider community must weigh Bowe's draft against the competing proposal to also claim the committee's existing $125 million-plus treasury. Whichever text reaches rough consensus decides whether grants funding ends abruptly or converts into a spend-down endowment, and whether ZCG keeps full control of money it has already been allocated. The outcome also sets precedent for how future protocol-level funding disputes at Zcash get settled.