Zcash Co-Founder Moves to Shut Off 8% Grants Funding Tax, Citing $125 Million War Chest

Zcash co-founder Sean Bowe has put forward a draft proposal to cut off one of the network's two automatic funding streams, arguing that the body it feeds, Zcash Community Grants, has accumulated far more money than it could reasonably spend.

Under Zcash's current issuance rules, 8% of every newly minted ZEC is directed to ZCG, while a separate 12% slice funds a dedicated development fund. Bowe's draft ZIP would end the 8% stream and redirect it instead into a new Network Sustainability Mechanism reserve, intended to support the network's long-term security funding rather than grants.

Announcing the draft on October 27, 2026, Bowe wrote on social media: "It's time to turn off the ZCG funding stream. ZCG has over $125M in funding, and will receive millions more before the spigot is turned off. The program was never designed to handle this amount of funding. Draft ZIP:"

How the $125 million figure was reached

Bowe's calculation combines ZCG's existing research and grant reserves, held at 91,453 ZEC, worth $8.8 million, with the present value of the 8% issuance stream still due to flow to the program before any change could take effect. At a ZEC price of $1,300, he puts the total net worth of ZCG's holdings at $125 million.

Against that, ZCG has so far committed $2.4 million in funding to grant recipients. Bowe's draft notes that, even at a hypothetical spending rate of $10 million per year, far above the program's current pace, the existing reserves alone would keep ZCG funded for more than 12 years without a single additional ZEC flowing in.

Part of a wider debate over Zcash's funding structure

The proposal follows a related debate over the separate 12% development fund. In September, Dragonfly manager Haseeb Qureshi proposed letting that fund expire rather than renewing it, pointing to similar concerns about the scale of resources being set aside through automatic issuance.

Bowe's draft ZIP is still in its early stages. It requires further discussion within the Zcash developer community, and no date has been set for a final vote. The proposal would need to move through the network's standard governance process before any change to ZCG's funding stream could be implemented.