Zcash celebrates its tenth anniversary on October 28, 2026 with a financing model that is unusual in crypto. Unlike Bitcoin, the network reserves 20% of block rewards for the development of its ecosystem. A strategy praised by Grayscale, which sees it as one of the reasons for its longevity. However, this mechanism is now the subject of debate: a historic developer is proposing to eliminate part of this financing, considering the current reserves largely sufficient.
In brief
- Zcash celebrates its tenth anniversary with 20% of block rewards dedicated to development.
- Sean Bowe proposes redirecting the 8% intended for community grants.
- The NU7 update, expected at the beginning of November, should reduce the time between two blocks from 75 to 25 seconds.
Zcash funds its development with 20% of crypto rewards
Ten years after its launch, Zcash still has a financing mechanism integrated directly into its blockchain. In an analysis published on October 26, Zach Pandl, head of research at Grayscale, highlights this particularity.
The American manager knows this crypto well. In August, Grayscale launched its Zcash ETF on the US market, allowing investors to gain exposure to ZEC from a brokerage account. This time, his attention is focused on the economic functioning of the network.
On Bitcoin, miners receive all of the new units created during block production. Zcash works differently. Miners keep 80% of the new ZECs, while the remaining 20% funds development and research initiatives.
This funding is currently split between two programs. The first, Zcash Community Grants (ZCG), receives 8% of total rewards. In particular, it finances technical projects and tools intended for the ecosystem. The remaining 12% feeds a financing mechanism controlled by ZEC holders.
This system has evolved since 2016. Originally, Zcash used a Founders’ Rewards intended in particular for founders and first contributors. The mechanism was then reorganized to prioritize community development.
Grayscale believes that this regular funding has allowed the network to continue its improvements, even during periods of crypto market declines. The manager cites in particular the different generations of confidential transactions: Sprout in 2016, Sapling in 2018, Orchard in 2022 and Ironwood in 2026.
A $125 million fund rekindles the debate at Zcash
However, this strategy is the subject of a new challenge. On October 26, Sean Bowe, cryptographer and historic Zcash contributor, presented a proposal to change the distribution of rewards.
Its objective: to remove the 8% automatically allocated to Zcash Community Grants. The sums concerned would be transferred to the Network Sustainability Mechanism (NSM), a reserve intended to financially support the security of the network in the long term.
Bowe believes that the community program already has significant resources. According to figures presented in its proposal, ZCG has approximately 91,453 ZEC and $8.8 million in dollar-denominated assets, minus $2.4 million in financial commitments. With a valuation hypothesis of $1,300 per ZEC, the net reserve represents approximately $125.3 million.
This amount naturally varies with the price of the token. The developer also compares available resources to program expenses. In the first quarter of 2026, grant spending would have reached $1.53 million.
Under current conditions, the 8% reward could amount to more than $68 million per year, based on the hypothetical price assumed. The proposal plans to preserve the reserves already held by ZCG as well as the 12% intended for financing controlled by the holders.
But not all developers share this approach. Josh Swihart, founder of ZODL, wants to go further by reviewing both programs. Other contributors fear that an excessive reduction in funding will weaken security and maintenance work.
These disagreements come after Zcash had already gone through governance tensions affecting the activity of its developers. For the moment, no changes have been adopted. Bowe’s proposal remains a working document, with no activation date.
A new crypto milestone expected on November 5
Zcash’s birthday also comes after a technically significant year. In July, the network activated Ironwood, a new generation of its privacy infrastructure. This update responds in particular to a vulnerability discovered in Orchard. The issue concerned the risk of unauthorized ZEC creation and required an emergency fix.
Ironwood introduces new cryptographic guarantees and mechanisms to facilitate fund recovery in certain quantum computing scenarios. Grayscale cites this development as one of the achievements enabled by regular developer funding.
Another deadline is approaching. The NU7 update should be activated around November 5, at block 3,543,405. It will reduce the target delay between two blocks from 75 to 25 seconds. Transactions will thus be able to obtain their first confirmation approximately three times faster.
This acceleration will not triple the creation of ZEC. Block rewards will be adjusted to preserve the issuance schedule and cap of 21 million units.
NU7 will also introduce a mechanism temporarily removing 60% of transaction fees from circulation. Their phased reintroduction into block rewards is scheduled to begin in February 2031. The Zcash Foundation has already released Zebra 7.0.0, a node software version compatible with this update.
Users therefore have a more precise calendar than during the first announcements. The speed objectives of NU7 had already been detailed in September. On the other hand, Sean Bowe’s proposal on 8% subsidies is not included in this update. It would require a subsequent modification of the protocol. Ten years after its creation, Zcash continues its investments in confidentiality. Grayscale defends the funding that has accompanied this progress. Part of the community now wants to review the way this money is distributed.
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