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Draft ZIP from Zcash's Sean Bowe would redirect ZCG's 8% block subsidy to the NSM reserve

Forum proposal by maxdesalle and a draft ZIP from Sean Bowe (ebfull) would end new Zcash Community Grants and route the 8% block-subsidy share to the NSM reserve, targeting NU8.

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A draft ZIP from Sean Bowe (forum handle ebfull), responding to a community proposal by maxdesalle titled "End ZCG and send its funds to the NSM", would redirect the 8% block-reward share currently paid to Zcash Community Grants (ZCG) into the Network Sustainability Mechanism (NSM) reserve, where the coins would be held out of circulation. The forum thread was posted October 26, 2026 at 23:02 in the Governance category; ebfull replied October 27 saying a draft ZIP had been submitted. Secondary coverage from Crypto Briefing describes the ZIP as introduced October 26 and still a draft on October 27.

Current block-reward split

After NU6 (November 2024) and NU6.1 (November 24, 2025), the Zcash block reward is distributed as:

Miners                                      80%
Zcash Community Grants (ZCG)                 8%
Coinholder-Controlled / "Deferred" Fund     12%

The split runs out at the third halving, expected around 2028. The proposal targets the 8% ZCG stream.

What the draft ZIP changes

Per the forum thread and the Crypto Briefing write-up:

  • ZCG stops approving new grants once the ZIP activates. Existing milestone commitments continue to be paid out.
  • The 8% share is redirected to the NSM Value Balance — the protocol's locked reserve — so the coins are removed from circulation at issuance, matching how the NSM already treats held-back transaction fees.
  • The 12% Coinholder-Controlled Fund share stays untouched. The proposal does not touch miner subsidies either.
  • Timing: the ZIP targets NU8, the upgrade after NU7. NU7 is expected to activate around November 5, 2026.

The ZIP is a draft; it has no number in Crypto Briefing's coverage, and the forum post does not quote one.

Why the thread exists

The author's framing (maxdesalle, in the forum summary) is that ZCG's governance structure has drifted from coinholder preferences: "The people who pay have no say, the people who get paid do." The argument is less about ZCG's effectiveness than about who holds the lever — the thread's premise is that routing the 8% to NSM returns the economic decision to coinholders at the next governance window.

The counter-case, surfaced in forum replies summarized by Crypto Briefing, is that ZCG has funded the development pipeline for the better part of the current issuance era, and routing its 8% to the NSM reserve rather than to another dev-funding vehicle leaves Zcash with no explicit protocol-level dev fund after existing milestones pay out. The Coinholder-Controlled Fund (12%) remains available but is a different disbursement mechanism.

Numbers block (per published subsidy data)

- Pre-NU6 (post-2020 halving):        Miners 80%, Dev Fund 20%
- NU6 (Nov 2024, block 2726400):       Miners 80%, ZCG 8%, Deferred lockbox 12%
- NU6.1 (Nov 24, 2025):                Miners 80%, ZCG 8%, Coinholder-Controlled 12%
- Proposal (targeted at NU8):          Miners 80%, ZCG 0%, Coinholder-Controlled 12%,
                                       NSM reserve 8% (locked)
- Issuance runway:                     Current structure expires at third halving (~2028)

Values at network scale depend on ZEC price and block cadence. Under NU7 (25-second blocks, ZIP 218), the per-block subsidy drops proportionally to keep daily issuance roughly constant — the 8% share is still 8%, not an absolute amount.

What to watch

  1. The ZIP's number and the formal text. The draft is on Sean Bowe's fork of the ZIP repo (the forum thread references a draft link containing his name). The ZIP's first numbered revision will reveal the exact activation height and whether it ships at NU8 or later.
  2. ZCG transition plan. The proposal says existing milestone commitments continue to be paid out — the forum thread does not specify how long that tail is, or whether unspent ZCG treasury funds also route to the NSM.
  3. Coinholder sentiment poll. ZIP changes to the funding structure typically go to a coinholder advisory poll before formal ZIP activation. NU7's own structural polls (ZIP 218 block interval, retention of halving schedule, NSM reissuance delayed to 2031) closed in September.
  4. NU7 mainnet activation ~November 5, 2026. The ZIP targets the next upgrade after that — so activation debate will play out through late 2026 and into 2027.

Context

Zcash's issuance stack has been in flux for 24 months: NU6.2's emergency Orchard patch, the NU6.3 "Ironwood" activation at block 3,428,143, the 25-second block target in NU7, and now a proposal to end explicit protocol-level dev funding before the structure expires at the third halving. The NSM, originally designed as a reservoir for a share of transaction fees, is being pulled into double duty as a destination for redirected block subsidies. Coinholders will decide; the shape of the issuance curve for the back half of this decade depends on how.

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