Key Takeaways
- ZODL founder Josh Swihart has opposed Sean Bowe’s plan, calling the sole shutdown of ZCG a half measure.
- Zcash’s $125 million ZCG treasury sparks debate over funding concentration and market uncertainty.
- The draft ZIP proposes crediting an 8% block subsidy to the NSM, but awaits approval ahead of NU7.
Zcash Founder Proposes Redirecting ZCG Allocation
Zcash Open Development Lab (ZODL) founder Josh Swihart has pushed back against fellow Zcash co-founder Sean Bowe’s proposal to disable the Zcash Community Grants (ZCG) funding stream, warning that doing so in isolation would only fuel community division and market uncertainty.
Swihart argued that rather than relying on a “half measure,” the ecosystem should completely retire the entire development fund, meaning discontinuing allocations to both ZCG and coinholder streams.
“It’d be a mistake to kill only one part of the dev fund,” Swihart said in reply to Bowe’s post calling for the sunsetting of the ZCG funding stream. “If dissolved, then no half measures, dissolve it all, both the ZCG and coinholder streams. The coinholder stream accrues ~216 ZEC a day until the halving. Same problem.”
In his post, Bowe argued that the ZCG, which has over $125 million in funding and likely will receive millions more before the spigot is turned off, “was never designed to handle this amount of funding.”
In his draft Zcash Improvement Proposal (ZIP), Bowe calls for an end to the ZCG automatic funding stream and a redirection of 8% of block subsidies to the Network Sustainability Mechanism (NSM). The proposal argues that ZCG has accumulated sufficient financial resources to continue supporting ecosystem development without receiving additional automatic allocations.
According to the proposal, ZCG holds approximately 91,453 ZEC and $8.8 million in cash against $2.4 million in outstanding grant liabilities. At a hypothetical ZEC price of $1,300, its net resources would be worth approximately $125.3 million, potentially supporting more than 12 years of grantmaking at an annual expenditure of $10 million. Bowe argues that continuing the existing allocation, equivalent to roughly 52,560 ZEC annually, would unnecessarily concentrate additional resources under ZCG’s control.
Under the proposed changes, the 8% allocation would instead be credited to the NSM, where it would be withheld from immediate circulation and governed by existing rules for potential future issuance. ZCG would retain control of its accumulated treasury and continue awarding grants, while the separate 12% coinholder-controlled fund allocation would remain unchanged. The proposal would also preserve Zcash’s maximum supply, existing transaction formats, and miners’ proportional share of block subsidies.
The proposal remains a draft and has not been approved or scheduled for activation. It is not included in the currently specified Network Upgrade 7 (NU7) and would require a subsequent upgrade before ZCG’s existing funding stream expires. No reference implementation or activation date has been established.
However, Swihart insists that ZCG was originally designed to balance governance and incubate speculative ideas, while coinholder grants acted as a temporary bridge when funding was scarce. Because “markets like certainty,” he urged redirecting both funding streams to the NSM through the upcoming halving while honoring all previously approved ZCG grants.
As a single exception, Swihart proposed a one-time, coinholder-voted endowment for a legal defense fund to protect Zcash developers. Notably, Swihart acknowledged that his own company, ZODL, which recently received a retroactive coinholder grant for core protocol work, would lose access to a key funding source under a total fund retirement.
