Zcash Governance Crisis: ZCG Backs Down on 98,000 ZEC Dev Fund Plan

Zcash Community Grants (ZCG) has withdrawn its own proposal to redirect about 98,000 ZEC toward future block rewards, just four days after posting it. 

The October 29 plan would have shrunk ZCG's funding and moved part of its treasury into a reserve for miners. Its withdrawal leaves the bigger fight over who controls Zcash's development money unresolved, even as ZEC trades above $1,300.

Key Takeaways

• The withdrawal changes nothing yet. ZCG still receives 8% of new ZEC, about 144 ZEC per day, and holds roughly 91,500 ZEC. Every rival proposal remains a draft.

• The "98,000 ZEC" is not a single balance. It combined about 36,200 ZEC from ZCG's treasury with roughly 62,000 ZEC of future income that ZCG would have forgone.

• A rival plan is the one to watch. A joint draft from Sean Bowe, Zooko Wilcox and Jason McGee would end ZCG's 8% stream and require ZCG to send 50,000 ZEC to the same reserve.

What Did ZCG Propose, and Why Was It Controversial?

ZCG proposed a self-imposed funding cut. In an October 29 "first look" on the Zcash Community Forum, it said it wanted to "cut our own funding, give back what we don't need, and put it toward future block rewards."

According to ZCG's post and Unchained's reporting:

• Taper: ZCG and the coinholder-directed grants program would shrink about 3% per month, ending at the 2032 halving.

• Income: ZCG would receive about 47,000 ZEC through 2032, versus about 109,000 ZEC by the 2028 halving under current rules.

• Treasury: About 36,200 of ZCG's roughly 91,500 ZEC would move to the Network Sustainability Mechanism (NSM), leaving about 55,200.

• Total: About 98,000 ZEC redirected, which at roughly $1,310 per ZEC is about $128.7 million, per Crypto.news.

Critics said it did not go far enough. Forum users questioned ZCG's accountability, noted the plan would extend its mandate to 2032 and cited a $455,000 shielded-assets grant made after coinholders voted 98.6% against that feature (Altcoin Buzz says it could not independently confirm the grant). Helius CEO Mert Mumtaz called the plan "nowhere near good enough," per Unchained.

Why Did ZCG Withdraw the Plan?

ZCG gave only one line of explanation. On November 2–3 (sources differ on the date), it said it had "decided not to take this proposal forward" because "the conversation has moved quickly since then," and that the future of the Dev Fund and its treasury is "for the community to decide through Zcash's usual governance process."

Unchained reports that a poll attached to the plan drew only 36 voters: 21 yes, 6 wanting more details and 9 no. ZCG closed the poll less than a minute after posting the withdrawal, and a moderator closed the thread the next morning. ZCG did not say which process or timeline it expects.

What Is the Zcash Dev Fund, and How Did It Become So Large?

The Dev Fund diverts part of each block's new ZEC to development and grants instead of miners. Bankless traces its history:

• 2016–2020: The Founders' Reward sent 20% of block rewards to founders, early investors and employees.

• 2020–2024: ZIP 1014 sent 20% to ECC's parent company, the Zcash Foundation and a major grants program.

• 2024 onward: ZIP 1015 and ZIP 1016 gave ZCG 8% and, under ZIP 1016, created a coinholder-controlled fund with 12%. Both run through the third halving, in late 2028.

Because the funding is a percentage of ZEC issuance, its dollar value rose with the price. Bankless cites a ZCG dashboard of 91,452.98 ZEC against about $2.4 million in outstanding grant obligations, Q1 2026 spending of about $1.53 million, and approved grants of about $24.3 million overall. At about $1,310 per ZEC, ZCG's treasury is worth roughly $120 million (our arithmetic).

ZCG's committee has five members, selected through the Zcash Foundation's Community Advisory Panel. Critics argue it spends block rewards that coinholders don't directly control, which is the heart of the "governance crisis" Zooko Wilcox described in his October 30 post.

What Is the Network Sustainability Mechanism (NSM)?

The NSM is a reserve that holds ZEC and reissues it to miners later, in effect smoothing future block rewards. It comes from ZIP 237, which coinholders backed with 96.6% in September, per ZCG's post.

Key points:

• Deferred, not burned. Redirected ZEC is held and paid to miners over time.

• NU7 role. Per Crypto.news and CoinCentral, the NU7 upgrade sends 60% of transaction fees to the reserve and 40% to miners. Reissuance from the reserve begins at block 8,939,664.

• Supply unchanged. The 21 million cap and the halving schedule stay the same.

ZCG argued that miners would have received about 20% less in 2029 and 2030 but more than current law from 2033 onward. Those are ZCG's own estimates.

Which Proposals Are Still on the Table?

Several drafts compete, and none has been adopted:

The joint draft is about 13,800 ZEC more than ZCG itself offered. Unchained values the 50,000 ZEC at about $61 million at $1,224 per ZEC, and Crypto Economy at about $65 million at $1,300. ZCG would keep about 41,453 ZEC under that plan, per Crypto Economy. Tom Howard, author of a rival wind-down ZIP, said he could "tolerate" the joint plan, according to Unchained.

Not everyone wants cuts. Gemini co-founder Tyler Winklevoss argued for ending the arrangement, but Grayscale argued for continued protocol-funded research, and Bankless notes developers such as Jack Grigg argue that ending ZCG without a replacement would shift funding toward miners.

What Happens Next in Zcash Governance?

There's no fixed vote on the Dev Fund yet. Here is what is known:

• ZCG's 8% continues until a change is approved and implemented.

• Any change needs a network upgrade after NU7, which has no date.

• Coinholder grants continue. Crypto.news reports the 12% stream's last round approved $8.39 million across 17 projects, its next proposal window closes November 13 and coinholder voting runs December 17–29.

How Is the ZEC Price Reacting?

ZEC is up sharply, but sources tie the move to the NU7 upgrade, not the withdrawal. CoinCentral reports ZEC at $1,310.03 on November 4, up 9.4% in 24 hours, with a market cap of about $21.75 billion and a rank of 10th. The all-time high is $3,191.93, so ZEC is about 60% below it, and the 7-day range is $1,122 to $1,392.

For perspective, Bitrue's March 10 article put ZEC near $218 and its May 7 article near $536, so ZEC is up roughly six times and 2.4 times since then. Analysts cited by Crypto.news watch $1,370 as a trigger level.

NU7 targets a block time cut from 75 to 25 seconds, activating at mainnet block 3,543,405, around November 5 (a block-height estimate). No source establishes that the governance fight moved the price, so treat any link as speculation. Trading in either direction is risky, and price can swing on headlines about the vote.

Where Does Bitrue Fit In?

Bitrue's October 30 article lists ZEC/USDT spot and a 3x leveraged ZEC3L/USDT market, with ZEC deposits and withdrawals handled mainly through alternative networks such as BNB Smart Chain, and native Zcash mainnet support listed as upcoming.

 It also describes flexible exchange-based staking at 1.8% APR, whereas an older November 2025 guide cited 7%, so check the live rate before relying on either. Zcash itself is Proof-of-Work and has no native staking.

If you're new here, open a free Bitrue account to explore the ZEC markets, and read Bitrue's coverage of ZEC mainnet support, the Zcash developers' new plan (March 2026) and whether Zcash can reach $1,000 (May 2026). Those last two carry old price snapshots, and ZEC has since passed that target.

FAQ

What did ZCG propose?

ZCG proposed tapering its own funding about 3% per month until the 2032 halving and moving about 36,200 ZEC from its treasury to the Network Sustainability Mechanism, about 98,000 ZEC in total including forgone income.

Why did ZCG withdraw the proposal?

ZCG said only that it decided not to take the proposal forward because the conversation had moved quickly. Critics said it did not go far enough, and a poll drew 21 yes, 6 more-details and 9 no votes.

Does the withdrawal change ZCG's funding?

No. ZCG still receives 8% of new ZEC, about 144 ZEC per day, and keeps its roughly 91,500 ZEC treasury until a change is approved and implemented.

What is the 50,000 ZEC plan?

A joint draft ZIP from Sean Bowe, Zooko Wilcox and Jason McGee would end ZCG's 8% stream, create a development and legal defense lockbox and require ZCG to send 50,000 ZEC to the NSM. It remains a draft.

What is the Zcash Network Sustainability Mechanism?

A reserve that holds ZEC and reissues it to miners over time. It was backed by 96.6% of coinholder votes in September, and NU7 routes 60% of transaction fees to it.

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