Zcash Co-Founder Proposes Ending Grant Subsidy to Fund Reserve
Sean Bowe’s draft ZIP aims to redirect 8% of Zcash block rewards into the Network Sustainability Mechanism reserve.
Zcash Co-Founder Proposes Ending Grant Subsidy to Fund Reserve
Sean Bowe's draft ZIP aims to redirect 8% of Zcash block rewards into the Network Sustainability Mechanism reserve.
Zcash Network Sustainability Proposal Surfaces
Zcash co-founder and protocol developer Sean Bowe has introduced a draft proposal to reshape the network's block reward distribution. According to Cryptobriefing, Bowe published a draft Zcash Improvement Proposal (ZIP) on October 26, 2026, aimed at turning off the 8% block subsidy stream currently allocated to Zcash Community Grants (ZCG).
Under the draft plan, that 8% value would instead flow directly into the Network Sustainability Mechanism (NSM) reserve. Rather than being paid out to grant recipients, the coins would be held out of circulation as a non-spendable output, creating no immediate issuance pressure.
Transitioning Away From Community Grants
If implemented, ZCG would not vanish immediately. The committee would stop approving new grants while continuing to honor existing milestones from its current treasury, transferring whatever remains to the NSM eventually.
Following the NU6 and NU6.1 upgrades, Zcash block rewards are split three ways, with miners receiving 80%, ZCG taking 8%, and the Coinholder-Controlled Fund holding the remaining 12% until the third halving around 2028. Bowe's proposal focuses solely on the 8% grants portion, leaving the miner share and coinholder fund untouched.
Broader Ecosystem Context and Institutional Interest
The proposal arrives amid governance discussions and as Zcash approaches the NU7 network upgrade, scheduled for approximately November 5, 2026. NU7 aims to cut block times to 25 seconds and introduce initial fee-reserve mechanics for the NSM.
Meanwhile, institutional interest has remained visible through products like Grayscale's Zcash Trust, which saw $41.09 million in net inflows despite ZEC declining roughly 25% through October. Grayscale recently credited Zcash's built-in developer funding model with supporting a decade of privacy technology innovation.
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