A draft proposal aiming to end Zcash Community Grants (ZCG) as an 8% recipient of every Zcash block reward has become an official Zcash Improvement Proposal (ZIP), opening a new chapter in the platform’s governance debate.
Zcash Improvement Proposal and Changes to Funding
Early on November 11 UTC, ZIP editor Jack “str4d” Grigg merged the draft into Zcash’s GitHub repository. This action formally recognized the draft as a candidate for protocol change, although it does not affect the network onchain until a future upgrade is approved and implemented.
The proposal was authored by Sean Bowe of Project Tachyon, along with Zooko Wilcox and Jason McGee from Shielded Labs. It recommends ending ZCG’s direct 8% share of every Zcash block reward. Instead, the coins would be paid into a new pool called the Future Dev and Legal Defense Fund Lockbox until the platform’s third halving event. The authors pointed out that the mechanism for spending funds from this lockbox has not yet been defined, so subsequent proposals would be necessary to specify its use.
Mini dictionary: Zcash Community Grants (ZCG) is a program within Zcash that supports projects benefiting the Zcash ecosystem, funded by a portion of the protocol’s block rewards. Zcash is a privacy-focused cryptocurrency launched in 2016, known for its use of zero-knowledge proofs to enable shielded transactions.
The draft also mandates the ZCG Committee to remove 50,000 ZEC from circulation within 30 days of activation and credit it to the Network Sustainability Mechanism (NSM). The NSM is designed to gradually release the removed ZEC back into circulation as part of future block rewards. According to the draft, this would account for approximately 55% of ZCG’s current holdings, amounting to the equivalent of roughly 347 days of ZCG’s typical funding stream calculated at 144 ZEC per day. The existing 12% block subsidy allocated to the Coinholder-Controlled Fund would remain unchanged.
Treasury Growth and Ongoing Funding Debate
The proposal’s authors highlighted that the recent surge in ZEC’s price has expanded the value of the ZCG treasury to unprecedented levels. As of October 26, ZCG’s dashboard reported approximately 91,453 ZEC—valued at around $8.8 million—while the program had outstanding commitments of about $2.4 million for previously approved grants.
The authors stated, “[T]he rapid rise in the price of ZEC has enlarged the monetary value of ZCG’s treasury to a much greater amount than ever before.”
The procedural step comes amid contentious debate about the governance process itself. On November 3, Grigg delayed the draft’s advancement, indicating that ZIP editors had agreed proposals impacting governance should be directed to a new body outside the ZIP process. However, on November 10, he reversed this hold, stating that the editors would accept this specific set of governance-related ZIPs for polling, but would pause further governance ZIPs until a broader process review.
Competing Proposals and Voting Process
Prior to the current draft, ZCG withdrew its own proposal on November 2 that would have reduced its block reward share and contributed part of its holdings to the NSM. That move shifted the focus to broader community governance about the Dev Fund’s future. Two major alternative proposals remain on the table: one to phase out ZCG and redirect its funding, and another, the Zcash Adoption Pool (ZAP), which would maintain ZCG’s share under a new name.
Five organizations oversee Zcash’s coinholder voting: Project Tachyon, Shielded Labs, Valar Group, the Zcash Foundation, and ZODL. These groups announced the voting schedule on November 5 in a forum post published by Jason McGee, a co-author of the draft. Coinholder and community panel votes are set to open on November 16 and run until 11:59 p.m. UTC on November 30. The organizations noted that the expedited timeline was chosen due to rising tensions within the community.
If the voting results indicate rough consensus, the five organizations stated they will support Network Upgrade 7.1 to implement the selected proposal, coordinating with engineering teams and miners to confirm the schedule.
| Proposal | Main Objective | Status |
|---|---|---|
| End ZCG funding, create Lockbox | Redirect 8% grant funding to new pool | Draft ZIP, pending vote |
| Zcash Adoption Pool (ZAP) | Maintain 8% grant funding under new name | Competing draft, pending vote |
| ZCG internal reform | Taper ZCG share, support NSM | Withdrawn |
The five participating organizations emphasized, “We’ve set an expedited timeline because tensions were high.”
