Sean Bowe, a co-founder of Zcash, has proposed a significant change regarding the funding structure for the Zcash Community Grants (ZCG), which currently allocates resources to projects within the Zcash ecosystem. He suggests halting the automatic funding from the Zcash block subsidy to this program, redirecting the funds instead to the network sustainability mechanism (NSM).
According to Bowe, ZCG has ample resources and is not equipped to handle the size of its current fund. He highlighted the need for a revised funding strategy, stating, “It’s time to shut off ZCG’s funding.” The proposal indicates that new payments, which currently allocate 8% of the block subsidy to ZCG, would instead bolster the NSM, designed to secure the network’s future sustainability.
Presently, ZCG receives 8% of the block subsidy, alongside a separate fund that is governed by ZEC (Zcash) holders, which receives 12%. Bowe’s plan does not affect the existing grants already approved, and ZCG can continue to support new projects with its current financial resources.
The rationale for this shift centers on the accumulated reserves of the ZCG, which, as per the latest data, include approximately 91,453 ZEC and around $8.8 million in dollar-equivalent assets, weighed against existing grant liabilities of roughly $2.4 million. Depending on the assumed value of ZEC, the remaining resources could be significant, displaying varying amounts between approximately $52.1 million to $125.3 million.
At the current rate, the 8% block subsidy yields around 144 ZEC per day, translating to about $68.3 million annually at a hypothetical price of $1,300 per ZEC. In contrast, ZCG’s operational costs detailed in a recent report were around $1.53 million for the first quarter. Assuming the expenses remain consistent throughout the year, this would lead to an annual expenditure of about $6.12 million, suggesting that the funding model currently surpasses the program’s actual spending needs.
Under Bowe’s proposed framework, the funds would not directly provide immediate liquidity to ZCG but would enhance the NSM balance. This move aims to gradually allocate resources for future network security through block rewards, ensuring that Zcash’s total supply and halving structure remain intact.
The proposal has ignited discussion within the Zcash community, with some members calling for a reevaluation of grant structures and fund allocations. Developer Jack Grigg emphasized the importance of sustaining development and maintenance activities that are essential for network security. Other contributors, like Josh Swihart, voiced the need for broader considerations that may include adjustments to the separate 12% fund governed by ZEC holders.
As of now, Bowe’s proposal is still a draft, and it does not incorporate changes into the current NU7 upgrade. An additional network upgrade will be necessary for its implementation, which aims to last until the third halving scheduled for 2028.
