Sean Bowe, co-founder and protocol developer of Zcash, has introduced a draft proposal to redirect the 8% block subsidy currently allocated to Zcash Community Grants (ZCG). Under the plan, these funds would be moved to the Network Sustainability Mechanism (NSM) reserve and held out of circulation.
The proposal, submitted as a draft ZIP on October 26, 2026, aims to stop the issuance of new coins to grant recipients. While ZCG would cease approving new grants, it would continue to fulfill existing milestones from its current treasury. Any remaining funds in the treasury would eventually be transferred to the NSM.
Currently, ZCG holds approximately 91,453 ZEC and cash reserves estimated between tens of millions and over $100 million. In Q1 2026, the committee reported expenses of roughly $1.53 million, with an annualized spending rate of about $6.1 million.
The initiative follows concerns regarding governance and the alignment of committee decisions with coinholder votes. The proposal specifically targets the 8% grant allocation, leaving the 80% miner subsidy and 12% coinholder-controlled fund unchanged until the third halving expected in 2028.
This development is separate from the upcoming NU7 network upgrade, scheduled for activation around November 5, 2026. While the upgrade will introduce initial fee-reserve mechanics for the NSM and reduce block times to 25 seconds, the proposal remains in draft status as of October 27, 2026.
