Zcash's Dev Fund Has a Market Success Problem
ZEC's price run has turned a fixed 8% grants stream into a big trove, and now Zcash's own builders want to turn it down.
Zcash turns 10 this week, and as the popular privacy chain enters its second decade, it’s now facing something of a nice problem to have: too much money.
That’s because on Monday (Oct. 26th), Zcash cofounder Sean Bowe, who now leads Tachyon, put up a draft ZIP to switch off the 8% cut of every block reward currently flowing to Zcash Community Grants (ZCG).
Bowe’s case? The program “was never designed to handle this amount of funding.”
— (@)
Bowe wasn’t alone in this thinking, either. In fact, his proposal above was one of four competing plans to land on the Zcash forum (and X) yesterday, with some pushing even further.
It’s an ironic turn of events, considering how for years Zcash’s “dev tax” was a go-to dunk for critics. Yet that same day, Grayscale’s head of research Zach Pandl published a note crediting the protocol’s “consistent financial support for R&D” for Zcash’s steady shipping.
So now the pushback is coming from inside the Zcash community, and the question at hand is clear: what should be done with a fixed slice of issuance that’s ballooned into a treasury bigger than anticipated and arguably much bigger than necessary?
All that said, let’s break down how Zcash got here and what’s on the table.
The timeline so far
For those still catching up, here’s a quick recap of how we’ve gotten to today…
2016 - 2020: The original Founders’ Reward routed 20% of each block reward to Zcash’s founders, early investors, employees, and advisors.
2020 - 2024: ZIP 1014 set up a 20% Dev Fund divided among the Bootstrap Project (the parent of the Electric Coin Company (ECC)), the Zcash Foundation, and a “Major Grants” program.
2024 - 2025: With ZIP 1015, direct funding for ECC and the Zcash Foundation ended. Instead, 8% went to ZCG, and 12% was parked in an in-protocol “lockbox” that nobody could spend from yet.
Nov. 24th, 2025 - now: ZIP 1016, led by Josh Swihart while he was ECC’s CEO, kept ZCG’s 8% and turned the 12% into a Coinholder-Controlled Fund, where ZEC holders vote on grants every quarter. Both streams run through Zcash’s third halving.
As for ZCG itself, it’s a 5-seat committee chosen by the Zcash Foundation’s Community Advisory Panel (ZCAP), with the Cayman Islands-based Financial Privacy Foundation (FPF) handling its funds.
The crux, though, is that these streams pay out in ZEC rather than dollars. And ZEC has been on a tear, up ~48x over the past three years. Indeed, as David Hoffman noted in Building the Zcash Thesis in 2026, ZEC ran ~1,200% in just 41 days during last year’s breakout alone.
Digging into the numbers
Bowe’s ZIP leans on ZCG’s own public dashboard, which reports 91,452.98 ZEC, ~$8.8M in USD, and ~$2.4M in outstanding grant obligations. He also notes the dashboard carries an “Updates required” label and hasn’t been independently reconciled, so consider it a rough snapshot.
Even still, we can see from this approximation that ZCG currently has around $125M in net funding. And since FPF reported ~$1.53M of ZCG spending in the first quarter of 2026 (i.e. ~$6.1M a year), the treasury alone covers roughly 20 years of spending at that pace and at today’s ZEC price.
The 8% issuance stream here comes out to 144 ZEC daily, or 52,560 ZEC annually. That’s ~$68M a year at today’s price, or more than 11x Q1’s spending pace!
And if nothing changes, ZCG is on track to receive ~109k more ZEC before the stream runs out at the third halving around late 2028. That’s more ZEC than it holds today, or ~$142M at current prices (assuming NU7 activates on schedule).
For some more perspective, the ZCG dashboard tallies the total value of the grants ZCG has approved at ~$24.3M to date, meaning ZCG’s treasury is now roughly 5x that.
In other words, ZCG’s funding has swelled because the price of ZEC has surged. As Bowe’s ZIP noted, a fixed cut of issuance “increases in dollar value when ZEC appreciates,” whatever the recipient already holds or plans to spend.
Why all this attention now, though? Bowe’s ZIP’s timing overlapped with a day of backlash over ZECsy, an outreach grant whose program includes pitching private ZEC payments at adult-industry conventions. It asked for $550k, and ZCG approved its first nine monthly milestones in August (however, note Bowe’s ZIP itself didn’t mention the grant).
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From there, the debate over that one grant quickly became a much bigger one over who controls ZCG’s money at all.
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What’s on the table now
Earlier, I mentioned that four proposals have surfaced in quick succession from this discourse. Let’s catch you up on their big ideas.
Notably, Bowe’s draft ZIP is the narrowest. It seeks to end ZCG’s 8% stream at a future network upgrade (it’s not part of NU7) and send that 8% to the Network Sustainability Mechanism (NSM) instead, for as long as the stream was originally scheduled to run. Crucially, ZCG would hold onto its current treasury and could still approve new grants, plus the 12% coinholder fund would remain untouched.
As for the NSM, it arrives with NU7 (slated for around Nov. 5th) and is essentially a reserve for ZEC removed from circulation, which later gets reissued to miners along a smooth curve with the 21M cap intact. Under NU7’s current specs, that reissuance starts around early 2031. So redirected ZEC isn’t burned but deferred.
Next, Maxime Desalle’s forum proposal goes even further. An investor at Winklevoss Capital, Desalle proposed ending ZCG at NU8 and sending its 8% to the NSM too. Under this plan, “ZCG approves no new grants after this proposal passes,” and once approved milestones are paid, ZCG’s remaining treasury would be swept into the NSM while coinholder grants continue.
For his part, Josh Swihart wants to retire both streams. Now the founder and CEO of the Zcash Open Development Lab (ZODL), he outlined a ZIP that would end the 8% and the 12% at NU8, with both redirected into the NSM until the third halving. ZCG would honor its approved grants and hand whatever remains over to the NSM, with one carve-out: a one-off legal defense endowment for Zcash’s devs that coinholders would vote on.
“It’d be a mistake to kill only one part of the dev fund,” Swihart wrote, noting that the coinholder stream has the same problem, accruing ~216 ZEC a day (~$100M a year at today’s price). He added that ZODL recently got a retroactive coinholder grant for its protocol work, and that his plan would cut off that possible funding avenue.
Lastly, ZecHub’s “Soft Landing” would split the difference. This proposal would keep today’s setup until the third halving, then halve both streams at each halving after that (8% to 4% to 2% to 0%, and 12% to 6% to 3% to 0%) so as to reach zero around 2036.
The case for and against
The case for cutting ZCG’s stream is about accountability.
As Desalle bluntly put it, “It’s coinholder money, and coinholders don’t control it.” ZCG answers to a panel the Zcash Foundation convenes, and the two constituencies don’t always agree.
In February’s NU7 polls, for instance, ZCAP backed Zcash Shielded Assets with 70.4% support, while 98.6% of coinholder votes went against it. Since Zcash now has working coinholder voting, Bowe’s ZIP explicitly favors coinholder decisions “over continued automatic accumulation by a separate grants committee.”
In contrast, the case against is about who ends up with the money.
Responding to Desalle’s proposal, ZODL engineer Jack Grigg argued that ending ZCG without a development-focused replacement is a decision to “explicitly give more money to miners by decreasing the funding available for development and maintenance of the chain.”
Cryptographer Ian Miers, a coauthor of the original Zerocash paper, was blunter: if the argument is “we shouldn’t just pay miners,” he wrote, “we look like clowns: this just pays miners with more steps.” And ZCG member artkor, speaking for himself rather than the committee, argued that giving up on a reserve fund entirely “would be an overly confident decision.”
Notably, the NSM’s 2031 start date bugs some people who support a cut, too. Dev Ojha, who leads Valar Group, wrote that “dampening some now, to give to miners beginning in a decade is imo prudent,” but argued the NSM shouldn’t kick in before Zcash’s fifth halving in 2036.
Zooming out
Zcash presently finds itself in an interesting middle ground.
For comparison, Bitcoin sends 100% of block rewards to miners and leaves developer funding to donors and companies. Meanwhile, the Ethereum Foundation gets nothing from issuance and instead spends down a treasury, under a policy that glides annual spending from 15% of its treasury to 5% over five years.
Zcash’s funding, by contrast, is a percentage of issuance, so it automatically scales with price in both directions. When ZEC was cheap in 2024, ZIP 1015 argued that ZCG “does not have the financial runway” that ECC and the Zcash Foundation had.
Now, the opposite problem has arrived. Interestingly, Bowe’s own ZIP specifically considered and rejected a middle path, a price-triggered cap, arguing it would add “a different funding policy and additional dependencies.”
Of course, none of the proposals outlined above is final. Each needs a network upgrade, and as ZIP 1016 notes, node developers ultimately decide what they ship. As of this morning, I hadn’t seen a formal response from ZCG or the Zcash Foundation, and no coinholder vote had been scheduled.
Next up, watch for more ZIPs to come out from this debate and any official comments from ZCG. Ultimately, this isn’t some wild crisis but a good problem, especially for a 10-year-old chain, and it’s one with several credible fixes already on the table.
In the meantime, be sure to check out our new Early Access episode with Sean Bowe and Dev Ojha, The Complete Zcash Roadmap, which is a superb primer on where Zcash is headed technically!
William M. Peaster
William M. Peaster, Senior Writer, has been with Bankless since January 2021. Immersed in Ethereum since 2017, he covers the onchain frontier with a particular interest in art, games, and other culture apps. He has a background in creative writing and writes fiction in his free time.
