Zcash co-founder proposes ending ZCG’s 8% block reward share

Zcash co-founder Sean Bowe has proposed ending the Zcash Community Grants (ZCG) funding stream, which gets 8% of each block’s new ZEC, and sending that share to the Network Sustainability Mechanism (NSM). Bowe says ZCG “has over $125 million in funding and will receive millions more before the spigot is turned off.”

What’s the scoop?

• What changes: Bowe’s ZIP draft stops payments from 8% to ZCG, the five-member committee selected by a community advisory committee to fund Zcash ecosystem grants and redirects this share to the NSM until the flow is scheduled to end in the third half. Bowe says ZCG’s current cash flow, about $125 million by his estimate, is enough to keep the grants going. The separate 12% fund flow controlled by coin holders is unchanged.

• What is NSM? : It is a reservation at the protocol level which removes the ZEC from circulation and gradually reissues it via future block rewardsto help fund network security as planned broadcasts come to an end. Once NU7 is activated, 60% of the transaction fees of each block will flow there rather than to miners, and Bowe’s proposal would add the redirected 8%. Reissuance is expected to begin in 2031.

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• What is the coin holder controlled fund? : This is the basin supplied by a distinct slice of 12% of the new ZEC of each block under Postcode 1016. ZEC holders vote on subsidy proposals every quarter, and three key-holding organizations (the Zcash Foundation, Electric Coin Company and Shielded Labs) hold the keys and approve payments. In contrast, the 8% of ZCG is spent at the discretion of its committee.

• Anticipated repulsion: The idea is already contested on the Zcash forum. Josh Swihart, Founder of Zcash Open Development Lab, Says it would be “a mistake to kill only part of the development fund” and wants the coin holder flow to be dissolved as well. The forum thread is also floating, brushing off ZCG’s remaining trove in the NSM, which Bowe says he would support but wants to be treated separately.

• What’s next: This is a draft without activation height and is not part of NU7. NU7, due around November 5, adds NSM and also freezes any remaining ZEC in Sprout, Zcash’s original protected pool, so ZCG share would only start flowing into NSM after a later upgrade.