Original author: Oluwapelumi Adejumo
Original translation: Saoirse, Foresight News
As investor attention rises, the funding reserves of this privacy-focused public chain continue to expand, and the Zcash community is facing a choice: whether to cancel developer subsidies or continue this funding mechanism.
After Zcash co-founder Sean Bowe proposed stopping automatic allocations to the Zcash Community Grants (ZCG) program, the debate quickly intensified. He believes that the grant program's existing reserves are already substantial enough to support several years of development work without additional allocations.
His proposal gave rise to more radical demands, with ZODL founder Josh Swihart, Gemini co-founder Tyler Winklevoss, and other ecosystem participants expressing their positions; at the same time, another alternative proposed continuing development funding support until 2036 while reducing the grant amount.
The outbreak of this disagreement coincides with Zcash about to mark the tenth anniversary of its launch on October 28 (that is, today). Institutional funds are reallocating to the project, privacy transaction activity is rising, and the market has also begun to examine how this public chain should distribute newly minted ZEC tokens.
Zcash's $125 million treasury funds trigger calls to dissolve the grant program
In a draft proposal on October 26, Bowe suggested transferring the 8% block reward share originally allocated to ZCG to the Network Sustainability Mechanism (NSM). NSM is a protocol reserve pool originally established to safeguard long-term block reward supply. Bowe posted on X:
"It's time to cut off ZCG's funding source."
He added that ZCG's existing funds have already exceeded $125 million, and even before the deadline set in the proposal, it will continue to receive millions in allocations; this grant mechanism was not designed originally to manage funds of this scale.
The funding valuation is based on approximately 91,453 ZEC, $8.8 million in fiat assets, minus $2.4 million in pending obligations, calculated at a ZEC unit price of $1,300. At that price, ZCG can receive allocations worth about $68.3 million per year, compared with its first-quarter spending, with annualized expenses of only $6.12 million.
Bowe's plan would retain all existing assets under ZCG's name, while not touching the separate 12% funding stream controlled by token holders.
But Maxime Desalle proposed going further: completely dissolve ZCG, stop approving new grant applications, and after fulfilling all committed grants, transfer the remaining treasury funds to NSM. Desalle believes that ZCG's governance mechanism is flawed: a small community advisory panel can influence where funds go, but all ZEC holders must bear the corresponding economic costs together. He also disclosed that he works at Zcash's leading mining company Cypherpunk, but emphasized that this proposal is independent of his work and involves no conflict of interest.
Bowe later said that he personally would be willing to consider transferring ZCG's existing treasury funds, but hoped to vote on that decision separately from the proposal to "stop future allocations."
Winklevoss and Swihart push for sharp cuts to funding, while an alternative plan also emerges
The controversy has long gone beyond the question of whether ZCG itself should continue to exist. Tyler Winklevoss publicly supports canceling the entire grant mechanism, saying: "It's time to end Zcash's USAID-style grant model."
Swihart, however, believes that merely cutting ZCG's allocations treats the symptoms but not the root cause. He said:
"Cutting only part of the development fund is the wrong approach. If we are going to dissolve it, we cannot stop halfway; ZCG and the token holder funding stream should be canceled together."
Swihart pointed out that the funding pool controlled by token holders receives about 216 ZEC per day, and as the coin price rises, the same problem of continuous fund accumulation will also arise. He proposed shutting down both funding streams at the same time and transferring them all to NSM; first fulfilling all approved grants, and then transferring the remaining compliant funds. Swihart also put forward a related idea: have token holders vote to approve the establishment of a one-time special fund to cover developers' legal defense expenses. He said:
"A compromise will only allow the controversy and factional maneuvering to continue; the market needs certainty."
It is worth noting that Swihart admitted that his company ZODL recently received a token holder grant for core protocol development; if the grant program is retained, they would still have the opportunity to continue applying for funds later. His proposal would directly eliminate this funding channel.
However, calls to completely cancel development subsidies have also met with an opposing plan. In a draft on October 27, community contributor Dismad proposed a gradual reduction plan: the total developer allocation share would be reduced from the current 20% to 10% around the 2028 halving cycle, to 5% in 2032, and completely canceled in 2036.
This plan retains the existing governance framework, giving developers a buffer period of up to ten years, with funding amounts decreasing year by year.
The final outcomes of these proposals differ greatly: Bowe's plan is to stop new allocations to ZCG; Desalle's plan is to directly abolish the ZCG institution; Swihart's plan is to cancel all development funds; Dismad's plan is to continue funding with annual reductions, breaking through the originally scheduled 2028 expiration.
As Zcash's popularity continues to rise, the trade-off over development funding becomes crucial
The many calls to cancel development subsidies form a sharp contrast with Grayscale's judgment. Grayscale believes that over the past decade, R&D carried out with protocol funding has been key to Zcash maintaining its technological competitiveness.
The asset management institution cited a series of upgrades such as Sapling, Orchard, and the recently launched Ironwood privacy pool, all of which depended on dedicated development funding. Grayscale proposed that to improve transaction throughput, resist quantum computing attacks, and address emerging cybersecurity risks, continued investment in R&D will still be needed. Grayscale said that to continue innovating, "the future will likely still require sustained support for developers from multiple funding sources, while optimizing the efficiency of fund allocation."
At the same time as Grayscale made this judgment, Zcash's market capitalization and on-chain activity also rose sharply. ZecStats data shows that ZEC has risen about 260% over the past year, with its price firmly above $1,200 and total market capitalization exceeding $20 billion; starting from about $60 in early 2025, the increase is nearly 20 times.
As the coin price strengthened, user demand for privacy features also increased. According to ZecStats, in late October Zcash averaged about 11,300 transactions per day, a year-on-year increase of 70%; shielded privacy transactions accounted for 62% of all transactions, compared with only 24% in the same period last year. Currently, about 4.96 million ZEC are held in shielded pools, accounting for 29% of the circulating supply; users can use this feature to hide transaction information.
The enthusiasm has also spread to traditional investment channels. Grayscale's Zcash product ZCSH had net assets of about $708 million as of October 26, enough to reflect the scale of institutional allocation to this coin.
