As Zcash celebrated its 10th anniversary on October 28, according to Woofun AI, its core governance conflict was completely intensified by co-founder Sean Bowe's funding proposal for the Zcash Community Grant Program (ZCG). As the market value and activity of the privacy chain soar, the community is facing a critical decision on whether to continue to automatically subsidize developers through the agreement layer.
The game about fund allocation began on October 26. Bowe submitted a draft proposal (draft ZIP) simultaneously on GitHub and community forums, recommending that the 8% block reward share originally allocated to ZCG be redirected to the Network Sustainability Mechanism (NSM). As a protocol-level reserve pool, NSM aims to guarantee the long-term supply of block rewards. As of October 27, the draft does not yet have an official ZIP number and reference implementation, nor does it take effect with the NU7 upgrade; a separate network upgrade is required. Bowe bluntly stated in a public statement that “it is time to cut off ZCG's funding sources”. The core logic is that ZCG's existing reserves are too rich to support years of development without additional funding. According to its estimates, ZCG's current capital is valued at over US$125 million. This figure is based on approximately 91,453 ZEC and US$8.8 million fiat assets, after deducting US$2.4 million of outstanding contract payments. The calculation basis is the ZEC unit price of US$1,300. Under this pricing system, ZCG's annual potential grant value is as high as $68.3 million, while its actual annualized expenditure is only $6.12 million, which is a serious imbalance between supply and demand. Bowe's plan advocates retaining all existing assets under ZCG's name, and clearly doesn't touch the other 12% of independent capital flows controlled by token holders.
However, this gentle adjustment did not calm the controversy, and Maxime Desalle immediately proposed a more aggressive dissolution. Desalle believes that ZCG's governance structure is fundamentally flawed: a small group of community advisors can decide where the funds go, and all ZEC holders have to share the financial costs. He proposed to completely disband ZCG, stop approving new applications, and transfer all remaining funds to NSM after fulfilling all promised grants.
Notably, Desalle disclosed that she worked for Zcash's leading mining company Cypherpunk (CYPH.US), but emphasized that the proposal was independent of her job and had no bundled benefits. Bowe later responded that although he was willing to consider transferring the existing treasury, he wanted to vote “stop subsequent funding” and “fund transfer” separately.
The controversy quickly spread to a wider range of ecological players, and Tyler Winklevoss and Josh Swihart became central voices in the complete abolitionist faction. Winklevoss publicly supports ending the entire funding mechanism, comparing it to the “United States Agency for International Development” style inefficient model. Swihart, on the other hand, pointed out that cutting off the ZCG funding alone will not cure the symptoms, because the fund pool controlled by token holders still accounts for about 216 ZEC per day. As the price of the currency rises, the problem of capital accumulation is also serious. He advocates shutting down the two fund flows at the same time, transferring all of them to NSM, and transferring the remaining compliance funds after the execution of the contract is completed.
Swihart also proposed the establishment of a one-time special fund to cover developers' legal protection expenses, stressing that “the compromise solution will only allow the dispute to continue.” Ironically, ZODL, a company owned by Swihart, recently received a token holder grant for core protocol development, and if its proposal passes, the channel will simply shut down. Faced with calls from activists, community contributor Dismad proposed a progressive reduction plan on October 27 in an attempt to find a balance between certainty. The plan proposes to reduce the developer's total grant share from the current 20%, to 10% around the 2028 halving cycle, and 5% in 2032 until it is completely abolished in 2036.
This path preserves the existing governance framework, provides developers with a ten-year buffer period, and breaks through the original schedule due in 2028. The quadripartite plan had a very different end: Bowe stopped additional funding, Desalle terminated the agency, Swihart cancelled all funds, and Dismad continued funding and reduced the amount year by year. Core developer str4d (Daira-Emma Hopwood) raised another question in terms of cost and time: terminating ZCG without alternative development capital flows is tantamount to clearly giving more money to miners; NSM will not start disbursing until February 2031, and there will be a vacuum in developer funding during the transition period.
While private solutions clash fiercely, an institutional perspective provides another dimension of scrutiny. Grayscale believes that research and development funded by agreements over the past ten years is the cornerstone of Zcash's technical competitiveness. The asset management agency pointed out that key upgrades such as Sapling, Orchard, and the newly launched Ironwood privacy pool are all inseparable from the support of special development funds. Facing the need to increase transaction throughput, resist quantum computing attacks, and address cybersecurity risks, Grayscale emphasizes the need to continue to invest in R&D in the future, and suggests supporting developers through multiple funding to optimize distribution efficiency.
This view is in stark contrast to calls for the elimination of subsidies, and highlights the tension between long-term technological iteration and short-term financial efficiency.
Drastic fluctuations in market data provided the macro context for this governance debate. According to data compiled by Woofun AI, ZEC has increased by about 260% in the past year, and the price has stabilized above $1200, and the total market value has exceeded 20 billion US dollars; since about $60 in early 2025, the increase is nearly 20 times. Increased currency prices have directly driven demand for privacy features. ZecStats statistics show that in late October, Zcash averaged about 11,300 transactions per day, an increase of 70% over the previous year; the share of privacy-blocking transactions jumped to 62% from 24% last year. Currently, about 4.96 million pieces of ZEC are stored in shielded tanks, accounting for 29% of the total circulation. The institutional allocation is also significant, with Grayscale's Zcash ETF (ZCSH.US) net-worth of $708 million as of October 26. In the context of rising market capitalization and activity, how to distribute newly minted ZEC tokens has become a key variable in determining the direction of Zcash's ecosystem over the next ten years.