Zcash co-founder proposes ending automatic grants funding, citing $125 million treasury

Zcash co-founder Sean Bowe has proposed stopping automatic funding for Zcash Community Grants (ZCG). Bowe says the program's treasury can finance years of spending without further income. Bowe published the draft late Monday.

The draft would redirect ZCG's remaining 8% allocation of newly created ZEC into the Network Sustainability Mechanism, a reserve designed to support future mining rewards. The redirected funds would stay in that mechanism through the remainder of the grants stream's current term. The committee would retain existing assets and continue financing grants from those assets.

The committee's dashboard listed about 91,453 ZEC and $8.8 million, including $2.4 million committed to grant recipients. Bowe calculates the uncommitted balance at $125.3 million using an illustrative price of $1,300 per ZEC. The automatic funding does not depend on the size of the committee's existing holdings. At Zcash's target network pace, ZCG receives about 144 ZEC daily, worth approximately $68 million annually.

The Financial Privacy Foundation, which administers ZCG's money, reported program expenses slightly above $1.5 million in the first quarter. That spending corresponds to about $6 million annually, below one-tenth of the annual inflow. Dollar valuations fluctuate with ZEC's price. Bowe estimates that even at $500 per ZEC, the existing treasury could finance about five years of spending, assuming annual expenses of $10 million.

A community advisory panel elects ZCG's five committee members. The committee chooses grants without an additional vote by coinholders. Another funding program receives 12% of newly created ZEC. Holders vote on that program's grants each quarter under participation and approval requirements. Bowe proposes retaining the 12% allocation. Bowe's draft argues that adding funds to ZCG's separate custody and governance structures increases risk when substantial reserves already exist.

The proposal follows criticism of a ZCG-financed outreach project that demonstrated private payments at an adult-industry convention over the weekend. ZECsy, the team running the project, sought $550,000 for activities at adult-industry events, cryptocurrency conferences and workshops. ZECsy's pitch included helping workers affected by banking restrictions receive payments without revealing personal financial information. The committee authorized startup funding and nine initial milestones worth about $461,500. Photographs of ZECsy's booth at Exxxotica in Edison, New Jersey, circulated on X on Sunday.

The committee's August approval was divided. Committee member Hanh opposed the grant over concerns about cost and evidence of sustained adoption. Other committee members supported the team's capacity to attract new users. The nine-month funding limit provided an opportunity to assess results before approving additional money. Bowe's draft does not mention the ZECsy grant and instead grounds the proposal in ZCG's reserves and ongoing income.

The proposal specifies no activation date and requires changes to Zcash's network rules. ZCG will continue receiving about 144 ZEC daily until a network-rule change takes effect.