Original author: Oluwapelumi Adejumo
Original translation: Saoirse, Foresight News
With increased investor attention, the funds of this privacy public chain continue to expand, and the Zcash community is faced with a choice: to eliminate developer subsidies or to continue this funding mechanism.
After Zcash co-founder Sean Bowe proposed halting automatic grants to the Zcash Community Grants (ZCG) program, the debate quickly escalated. He believes that the existing reserves of the grant program are already sufficient, and no new allocations are needed to sustain several years of development work.
His proposal sparked more radical demands, with ZODL founder Josh Swihart, Gemini co-founder Tyler Winklevoss, and other ecosystem participants expressing their views; meanwhile, another alternative suggested extending development funding support until 2036, contingent on reducing the funding amount.
This divergence erupted just as Zcash is about to celebrate its tenth anniversary on October 28 (today). Institutional funds are re-positioning themselves in this project, privacy transaction activity is rising, and the market is beginning to scrutinize how this public chain should allocate newly minted ZEC tokens.
Zcash's $125 million treasury fund triggers calls to dissolve the grant program
In a proposal draft on October 26, Bowe suggested reallocating the 8% block reward share originally designated for ZCG to the Network Sustainability Mechanism (NSM). NSM is a protocol reserve pool, established to ensure long-term block reward supply. Bowe stated on the X platform:
“It’s time to cut off the funding for ZCG.”
He added that ZCG's existing funds have exceeded $125 million, and even by the deadline set in the proposal, millions in allocations would continue to be received; this grant mechanism was not originally designed to manage such a large sum of funds.
The fund valuation is based on approximately 91,453 ZEC and $8.8 million in fiat assets, minus $2.4 million in outstanding obligations, with a base calculation of ZEC priced at $1300. At this price, ZCG could receive approximately $68.3 million in grants annually, compared to their quarterly expenditure of only $6.12 million.
Bowe's plan would retain all existing assets under ZCG while not touching the additional 12% controlled by token holders.
However, Maxime Desalle proposed a more drastic plan: to completely dissolve ZCG, no longer approving new funding applications, and transfer the remaining treasury funds to NSM after fulfilling all committed grants. Desalle believes that there are flaws in the governance mechanism of ZCG: a small community advisory group can control the direction of funds, but all ZEC holders must bear the corresponding economic costs. He also disclosed that he works at the leading mining firm Cypherpunk, but emphasized that this proposal is independent of his job and does not involve any conflict of interest.
Bowe later expressed that he is personally willing to consider reallocating ZCG's existing treasury funds but hopes to separate the resolution from the proposal to "stop future allocations" for voting.
Winklevoss and Swihart push for significant funding cuts, while alternative plans are also proposed
The controversy has long exceeded the mere survival issue of ZCG itself. Tyler Winklevoss publicly supports abolishing the entire funding mechanism, stating: “It’s time to end this grant model like the USAID for Zcash.”
Swihart believes that simply cutting ZCG's funding addresses the symptoms but not the root cause. He stated:
“Only cutting part of the development funding is the wrong approach. Since we want to dissolve it, we cannot do it halfway; both ZCG and the token holders' funding streams should be eliminated together.”
Swihart pointed out that the fund controlled by token holders receives about 216 ZEC daily, and as the price rises, similar issues of continuous accumulation of funds are expected. He proposed shutting down both funding streams simultaneously and transferring everything to NSM; first fulfilling all approved grants before transferring any remaining compliance funds. Swihart also proposed an idea: to establish a one-time special fund approved by a vote from token holders to cover developers' legal protection expenses. He said:
“Compromise solutions will only prolong disputes and faction infighting; the market needs certainty.”
It is worth mentioning that Swihart candidly stated that his company ZODL recently received a grant from token holders for core protocol development; if the funding plan remains, they still have the opportunity to apply for more funds later. However, his proposal would directly cancel this funding channel.
Nevertheless, calls for the complete elimination of developer subsidies have also sparked opposing proposals. In a draft from October 27, community contributor Dismad proposed a gradual reduction plan: the total development grant share would be reduced from the current 20% to 10% around a halving cycle in 2028, down to 5% in 2032, and completely eliminated by 2036.
This plan retains the existing governance framework, allowing developers a ten-year buffer period with decreasing funding amounts each year.
The final outcomes of the various proposals diverge significantly: Bowe's plan halts additional grants to ZCG; Desalle's plan completely abolishes the ZCG entity; Swihart's plan eliminates all development funds; while Dismad's plan continues funding but reduces it annually, extending beyond the originally scheduled expiration in 2028.
Zcash's popularity continues to rise, making decisions on development funding crucial
The numerous calls to eliminate developer subsidies sharply contrast with Grayscale's assessment. Grayscale believes that the R&D carried out with protocol funding over the past decade has been key to Zcash maintaining its technological competitiveness.
This asset management firm cited examples such as Sapling, Orchard, and the recently launched Ironwood privacy pool; all these upgrades rely on specialized development funding. Grayscale argues that to continue improving transaction throughput, defend against quantum computing attacks, and address the ever-emerging cybersecurity risks, ongoing investment in R&D will still be needed. Grayscale noted that sustaining innovation “will likely require ongoing support for developers from multiple funding sources while optimizing funding allocation efficiency.”
While making this assessment, Zcash's market capitalization and on-chain activity have also surged significantly. ZecStats data shows that ZEC has increased by approximately 260% over the past year, stabilizing above $1200, with a total market value exceeding $20 billion; from about $60 at the beginning of 2025, the increase is nearly 20 times.
As the price rises, user demand for privacy features is also increasing. ZecStats statistics indicate that in late October, Zcash had an average of approximately 11,300 transactions per day, a 70% year-on-year increase; privacy shielded transactions accounted for 62% of all transactions, up from just 24% in the same period last year. Currently, approximately 4.96 million ZEC is stored in shielded pools, constituting 29% of the total circulation, allowing users to hide transaction information using this feature.
The excitement has also spread to traditional investment sectors. Grayscale's Zcash product ZCSH had a net asset size of about $708 million as of October 26, reflecting significant institutional investment in this cryptocurrency.
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