Zcash Community Grants said in its withdrawal notice that it would not advance the proposal and that future decisions about the Development Fund and the committee’s treasury should be made through Zcash’s normal governance process.
The decision came less than a week after the committee introduced its plan. The proposal had attempted to address a growing imbalance in Zcash’s capital system: ZCG receives newly created ZEC automatically, while its accumulated treasury has become large enough to finance years of grants and related activity.
That arrangement places a substantial pool of protocol-created money under the control of a five-member committee. ZCG does not require a separate coinholder vote for each grant it approves. Under the current funding rules, it receives 8% of newly created ZEC, or approximately 144 ZEC per day.
The resulting question is not simply how much ZEC the committee should spend. It is who should decide how newly issued coins are allocated, and whether the current system gives users enough influence over that decision.
A proposal built around moving capital
The original ZCG proposal described a plan to taper the committee’s future funding and transfer approximately 36,200 ZEC from a treasury of about 91,500 ZEC to Zcash’s Network Sustainability Mechanism.
The NSM is intended to supplement miners’ block rewards over time. Redirecting funds there would therefore have changed the destination of Zcash’s capital, moving money away from discretionary grants and toward the network’s security and issuance economics.
The proposal also called for roughly 98,000 ZEC to be redirected toward future block rewards. Under the plan, ZCG’s projected income through the 2028 halving would have fallen from about 109,000 ZEC to approximately 47,000 ZEC, with further reductions expected as the system approached 2032.
From a capital allocation perspective, the proposal represented a compromise. It did not immediately eliminate the committee, but it would have reduced the flow of newly created ZEC into its treasury while transferring resources to a mechanism connected to mining incentives.
That compromise failed to resolve the underlying governance concern. Critics of ZCG’s current structure argue that reducing the committee’s future income is not enough if coinholders still lack direct control over spending decisions. Supporters of a formal governance process, meanwhile, contend that the scale and duration of the funding arrangement should be decided by the broader Zcash community rather than by the committee itself.
The withdrawal means the proposed transfer will not occur under this plan. It also means ZCG will continue receiving approximately 144 ZEC per day until a future network upgrade changes the rules.
Critics want the treasury under stronger control
In a proposal titled “End ZCG and send its funds to the NSM,” Maxime Desalle argued that Zcash should end ZCG’s automatic 8% allocation and send the committee’s remaining treasury to the Network Sustainability Mechanism.
Desalle’s central criticism was governance rather than grant quality. In that view, coinholders do not have adequate control over how grant money is spent, even though the funding originates from protocol issuance and therefore affects the economic interests of the whole network.
That argument gives the dispute a broader financial dimension. Automatic issuance is a recurring claim on Zcash’s monetary system. If the committee retains more ZEC than it can deploy quickly, the question becomes whether continued issuance represents productive investment or simply an expanding reserve controlled by a small group.
Ending the allocation would also force Zcash to prioritize. Instead of assuming a permanent flow of newly minted coins, grant recipients would need to compete for funding through a more explicit governance process or operate from a limited treasury. For critics, that constraint could improve accountability by making each major allocation more visible and contestable.
The opposing concern is that abruptly removing ZCG’s funding could reduce the ecosystem’s ability to support developers and other projects. A grant system with predictable resources can plan beyond individual votes, while a network dependent on periodic approval may face delays or political uncertainty. The disagreement is therefore also about whether stability is worth reduced direct oversight.
Alternatives remain in play
A separate proposal from Tachyon Group and Shielded Labs would end future ZCG funding, reduce its treasury, contribute 50,000 ZEC to the NSM and establish a future development and legal defense fund. Zooko Wilcox endorsed that alternative, giving it support from a prominent figure in the Zcash ecosystem.
That proposal would divide the treasury question into separate functions. Network sustainability would receive a defined allocation, while development and legal defense would receive a dedicated fund rather than relying on an open-ended grant committee budget.
The competing approaches reveal different theories of what Zcash’s treasury is for. One treats it as a long-term ecosystem budget managed by a standing committee. Another treats it as protocol capital that should be directed toward mining sustainability, development and legal defense through more accountable structures.
For now, neither approach has been adopted. ZCG’s withdrawal removes one proposed route for reducing its funding, but it does not settle whether the committee should continue receiving newly created ZEC at the current rate.
The next stage of the dispute will therefore concern governance mechanics as much as grant policy. The central issue is whether Zcash can convert a large, recurring funding stream into a system that users view as legitimate, transparent and economically disciplined.
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Read and checked by admin on 11/5/2026
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