The companies Tachyon Group and Shielded Labs have proposed ending further funding of the Zcash Community Grants program and transferring 50,000 ZEC out of the treasury, while preserving the ability to support new grants.
Zcash co-founder Zooko Wilcox announced the joint proposal on October 30, describing a compromise developed by Tachyon Group under the leadership of cryptographer Sean Bowe and Shielded Labs. Their plan preserves ZCG’s grant-making activity but ends the automatic funding that helped replenish the company’s treasury.
The draft lists Bowe, Wilcox, and Jason McGee of Shielded Labs as its owners. Created on October 29, it remains an unassigned Zcash improvement proposal, and no activation date has been set.
The proposal separates future funding from existing grants
The proposal calls for redirecting ZCG’s 8% share of the block subsidy into a new dedicated fund for future development and legal defense for the remaining lifetime of the funding stream.
These funds would accumulate at the protocol level with no custodian or spending key. No one would be able to withdraw them until a future proposal determines the payout procedure.
Bowe said the replacement came as a result of discussions with ZCG and other stakeholders. His previous proposal called for directing current funding into the Network Sustainability Mechanism. The new version reserves this stream of funds for possible future expenditures, to be decided separately by the community.
The existing 12% share in the fund controlled by coin holders and the reserve fund for deferred development will remain unchanged.
ZCG will continue operating on the assets remaining after the mandatory donation. In this way, the proposal differs from another draft that calls for a complete termination of the grants program.
The reduction of funds in the treasury would require ZCG to instruct the Financial Privacy Fund, which manages the program’s funds, to transfer 50,000 ZEC to a published, unspendable address.
The payment must be made as soon as possible, but no later than 30 days after community approval. ZCG will publish the transaction identifiers once the payments have been made, allowing the community to verify the transfers on the blockchain.
In the draft, this commitment is separated from the software changes. Sending the donation would not require a network upgrade. Redirecting the funding stream and incorporating the donated coins into the network sustainability mechanism would require coordinated changes during a post-NU7 upgrade.
Under the proposed mechanism, the donated ZEC would be taken out of circulation and credited to the NSM balance, returning through future block subsidies. Thus, the donation would support future issuance rather than permanently removing these coins from Zcash’s monetary fabric.
The document does not specify a calendar date for the required upgrade and does not yet provide a list of reference implementations.
