Zcash turns 10 on Oct. 28. And instead of a quiet anniversary, it has landed in the middle of a hard fight over developer funding. Investor interest is up. Treasury balances are up too. So the community is staring at a simple, uncomfortable question: shut off developer subsidies, or keep some version of them alive.
The latest flare-up started after Zcash co-founder Sean Bowe argued that automatic funding for Zcash Community Grants, or ZCG, should end. His case was blunt: the grant program already sits on enough reserves to pay for development for years, even if no new money comes in.
The size of the ZCG treasury is now at the center of the debate
In a draft proposal dated Oct. 26, Bowe said the 8% slice of block rewards now going to ZCG should instead be sent to the Network Sustainability Mechanism, or NSM. That NSM pool exists at the protocol level and is meant to support long-term block reward availability. Writing on X, Bowe said, "It's time to cut off ZCG's funding."
He went on to say ZCG already controls more than $125 million, and that millions more would still arrive before the proposal's cutoff date. In his view, the grant system was never built to handle a capital pool that large.
The estimate for the treasury used roughly 91,453 ZEC, $8.8 million in fiat assets, and $2.4 million in outstanding obligations, based on a ZEC reference price of $1,300. At that level, yearly inflows to ZCG would come to about $68.3 million, while first-quarter spending, annualized, was about $6.12 million.
Bowe's proposal would keep all assets already held by ZCG where they are. But it would not touch a separate 12% funding stream that token holders control.
More aggressive proposals call for dissolving ZCG or ending all development funding
The argument did not stay limited to whether ZCG should keep getting fresh allocations. Maxime Desalle put forward a much broader idea: dissolve ZCG altogether, stop approving new grant applications, pay out all grants already promised, and then move whatever remains in the treasury into the NSM.
Desalle argued that ZCG's governance setup is broken. Why? Because a small community advisory group can decide where the money goes, while every ZEC holder absorbs the economic cost. He also disclosed that he works at Cypherpunk, described in the report as a leading Zcash mining company, while saying the proposal was separate from his job and not connected to any personal interest.
Bowe later said he would personally be willing to move ZCG's existing treasury too. But he said that choice should be voted on separately from the proposal to halt future allocations.
Gemini co-founder Tyler Winklevoss also came out in favor of ending the wider funding structure. His words: "It's time to end Zcash's USAID-style grant model."
ZODL founder Josh Swihart went even further. He said cutting only ZCG funding misses the real problem: "It is the wrong approach to cut only one part of the development fund. If we're going to unwind it, we shouldn't stop halfway. Both ZCG and the token-holder funding stream should be canceled together."
Swihart said the token-holder-controlled pool gets about 216 ZEC a day and would run into the same stockpiling problem if the token price keeps rising. His proposal: shut down both funding streams, send them to the NSM, honor all approved grants first, and then transfer any remaining compliant funds.
He paired that with another idea. A separate one-time special fund, approved by token-holder vote, would cover legal defense costs for developers. As he put it, "A compromise solution would only keep the dispute and factional maneuvering going. The market wants certainty."
Swihart also acknowledged that his company, ZODL, recently received a token-holder grant for core protocol development. If the funding structure stays in place, the company could apply again later. His proposal would shut that route down entirely.
An alternative plan would keep funding in place and taper it over time
But calls to scrap developer subsidies have drawn an answer from the other side. In a draft dated Oct. 27, community contributor Dismad proposed a phased reduction instead: total developer funding would drop from 20% now to 10% around the 2028 halving, then to 5% in 2032, and then to zero in 2036.
That plan would keep the current governance structure intact while giving developers a 10-year transition window. Money would be reduced step by step, not cut off all at once.
The real-world gap between these proposals is wide. Bowe's plan stops new allocations to ZCG. Desalle's erases ZCG as an institution. Swihart's ends the entire development fund. Dismad's keeps funding alive past the original 2028 end date and then trims it in stages.
Grayscale and market data add pressure to the funding decision
The campaign to cut developer subsidies runs against Grayscale's view. According to the report, Grayscale said protocol-funded research and development has been central to Zcash's technical competitiveness over the last decade.
The asset manager pointed to upgrades such as Sapling, Orchard, and the recently launched Ironwood privacy pools as examples of work backed by dedicated development funding. Grayscale said more investment will still be needed to improve transaction throughput, protect against quantum computing threats, and deal with ongoing cybersecurity risks. Its position is plain: sustained innovation will probably require continued support for developers from multiple funding sources, along with more efficient capital allocation.
This governance fight is happening while both Zcash's market value and on-chain activity are climbing. Data from ZecStats cited in the report showed ZEC rose about 260% over the past year, stayed above $1,200, and pushed total market capitalization beyond $20 billion. From roughly $60 at the start of 2025, the gain was nearly 20x.
Demand for privacy tools has climbed too. ZecStats said Zcash was averaging about 11,300 daily transactions in late October, up 70% from a year earlier. Shielded transactions made up 62% of all transfers, versus 24% in the same period last year. Around 4.96 million ZEC are now held in the shielded pool, equal to 29% of circulating supply, which lets users hide transaction details.
Institutional exposure has climbed as well. Grayscale's Zcash product, ZCSH, held about $708 million in net assets as of Oct. 26, according to the report.
At the 10-year mark, the issue in front of the Zcash community is no longer just whether ZCG should keep getting block rewards. Bigger than that. The question now is how the network wants to balance development, governance, and reserves as attention and capital around the project keep growing.
