A proposal published on October 26, 2026, calls for Zcash to redirect 8% of its block subsidies from Zcash Community Grants (ZCG) to the Network Sustainability Mechanism (NSM), potentially reshaping how the privacy-focused blockchain finances development.The proposal, submitted to the Zcash Community Forum by contributor Maxime Desalle under the username maxdesalle, recommends terminating ZCG at the network’s future NU8 upgrade.Under the plan, ZCG would stop approving new grants after the proposal receives approval, honor previously committed funding milestones and transfer its remaining treasury to the NSM. The proposal has not been approved, and no activation date for the proposed change has been established.It arrives as Zcash approaches its tenth anniversary and prepares for further changes to its monetary policy through the forthcoming NU7 upgrade.
Proposal Challenges Existing Development Funding Model
Zcash currently directs 80% of block subsidies to miners and 20% toward development-related funding. Under the framework established by ZIP 1016, ZCG receives 8% of block rewards, while a separate coinholder-controlled fund receives 12%.Desalle’s proposal would eliminate the ZCG allocation without changing the coinholder-controlled funding stream. He argues that ZCG’s governance structure creates insufficient accountability to ZEC holders, whose ownership is diluted through ongoing token issuance.ZCG funding decisions are made through a committee elected by the Zcash Community Advisory Panel (ZCAP), which operates under the Zcash Foundation’s governance framework. Desalle cited approximately 200 panel members and claimed that 72 had previously received ZCG grants.He also alleged that ZCAP members were associated with approximately 75% of historical ZCG distributions. Those figures are claims made in the proposal rather than independently established findings of misconduct. The proposal highlights a disagreement over Zcash Shielded Assets, citing a February 2026 coinholder vote opposing the initiative and a separate ZCAP vote supporting it.Desalle argues that decentralized funding decisions should better reflect coinholder preferences and actual market demand. Supporters contend that the existing 12% coinholder-controlled allocation and private funding could continue supporting important development work.However, critics warn that eliminating ZCG could reduce funding for smaller projects and development activities that struggle to attract private capital.
Sustainability Mechanism Would Redirect Funds Toward Future Rewards
The proposed recipient, Zcash’s Network Sustainability Mechanism, is designed to reserve ZEC for eventual redistribution through future block subsidies. Under the proposed NSM framework, funds removed from circulation can be reissued over time to support network security while preserving Zcash’s 21 million ZEC supply ceiling.The mechanism is associated with Zcash’s planned NU7 upgrade, which also targets a reduction in block times from 75 seconds to 25 seconds. Current proposals envision NSM-related reissuance beginning in February 2031. Consequently, redirecting ZCG’s allocation would not immediately increase mining rewards. Instead, the funds would accumulate for later distribution under the network’s monetary rules.The proposal has already generated competing suggestions. Zcash contributor Josh Swihart argued that terminating only the 8% ZCG allocation would be insufficient and proposed considering the entire 20% development funding structure.Other community members defended retaining the coinholder-controlled allocation, emphasizing its direct voting process. Security researcher Ian Miers also questioned whether redirecting funds to the NSM would ultimately amount to transferring development resources to miners.These disagreements highlight the broader trade-off between financing software development and strengthening future mining incentives. Any implementation would require further governance discussions, technical specifications and network adoption. For Zcash holders, the proposal represents a potential shift in economic priorities rather than an immediate change to token issuance.Its outcome will depend on whether the community favors maintaining dedicated development grants or redirecting more resources toward long-term network security.