Co-founder of Zcash proposes ending funding allocation to the development fund when reserves exceed $125 million Sean Bowe, co-founder of Zcash (ZEC), has proposed ending the automatic 8% block reward allocation to the Zcash Community Grants (ZCG) program, citing that the fund has accumulated sufficient assets to continue financing projects within the ecosystem. According to The Block on October 27, the proposal comes as ZCG currently holds assets estimated at over $125 million. Instead of continuing to receive new funds from block rewards, future 8% allocations will be redirected to the Network Sustainability Mechanism (NSM), a reserve mechanism designed to support the long-term sustainability of the Zcash network. “It’s time to end funding for ZCG,” Bowe wrote on X, noting that the program was originally not designed to manage such a large capital pool. The development fund holds over $125 million in assets According to the draft proposal, ZCG currently holds 91,452.98 ZEC and approximately $8.8 million in USD-denominated assets. The fund has about $2.4 million in outstanding funding commitments. Bowe stated that the current 8% block reward allocation mechanism could generate over $68 million in ZEC value annually. Meanwhile, the Financial Privacy Foundation reported that ZCG recorded approximately $1.53 million in expenses for Q1/2026. The significant gap between funding inflows and operational costs is one of the key reasons driving the proposal to change the allocation mechanism. According to Bowe, continuing automatic capital injections may no longer be necessary given the fund’s substantial reserves. New funding will be redirected to the network sustainability mechanism If approved, the proposal would redirect the remaining 8% allocation to the Network Sustainability Mechanism for the remainder of the current funding period. The NSM is designed to support network security as ZEC issuance via block rewards gradually declines. Under the planned framework, this mechanism will retain a portion of ZEC for future redistribution through block rewards. The proposal does not increase the total supply of ZEC issued. Additionally, the separate 12% allocation to the Coinholder-Controlled Fund remains unchanged. Notably, ZCG will retain its current reserves and continue approving new grants and fulfilling existing commitments. Thus, the proposal primarily alters future funding flows rather than reclaiming accumulated funds. No implementation schedule yet The proposal currently lacks a specific block height activation and is not included in the already-defined NU7 upgrade. For the change to take effect, a future network upgrade will be required. The proposal may also spark debate within the community regarding resource allocation for the ecosystem. On one hand, reducing automatic subsidies could free up resources for network security and sustainability. On the other hand, grant programs remain vital for supporting developers, enhancing privacy, and building new applications. For Zcash, the core issue is not merely how much assets the fund holds, but how efficiently resources are utilized to sustain long-term development. If approved, Bowe’s proposal would mark a significant shift in the ecosystem’s funding mechanism, refocusing efforts from continuous fund replenishment toward managing existing capital and strengthening network sustainability.