Zcash Proposes Changing the Ecosystem Funding Mechanism

Zcash may change its ecosystem funding model. On October 26, 2026, co-founder Sean Bowe proposed redirecting 8% of the block reward into the Network Sustainability Mechanism. This affects ZEC holders, miners, and developers. The decision is not final yet.

The document has Draft status and does not yet have a number. It changes ZIP 207, 214, 237, and 1016. Launching it will require a separate future network upgrade, not NU7.

And there is an important nuance here. This is not a minor tweak, but a new approach to money in the network. That is why the topic quickly moved beyond a purely technical discussion.

What exactly do they want to change in Zcash?

The idea is simple. Instead of automatic Zcash Community Grants payouts, the funds will go to the NSM. In other words, the grant organization will no longer receive money directly.

The document refers to 8% of the block reward. According to the authors’ estimate, that amounts to about 144 ZEC per day or 52,560 ZEC per year. At a price of $1300 per ZEC, that is roughly $187,200 per day and $68.3 million per year.

For comparison, ZCG expenses in Q1 2026 were $1.530844 million. On an annualized basis, that is about $6.12 million. The difference is large. That is why the proposal sparked such active discussion.

Why was this issue raised now?

The authors of the initiative are looking at the long-term sustainability of funding. The project explicitly states that ZCG holds 91,452.98 ZEC and $8.796 million in dollar-denominated assets. Against that stand $2.417 million in liabilities.

At $1300 per ZEC, that works out to about $125.3 million in net resources. So the fund does not look empty. But the question is different: how exactly should this money work going forward?

There is another nuance. If 8% of issuance goes to the NSM, the funding system becomes less direct. That means the community will need to watch more closely who distributes these funds and how.

For Ukrainian readers, there is a simple takeaway here. In such networks, the token price often reacts not only to the market, but also to governance changes. This is especially noticeable when 16.9 million ZEC are in circulation and the market cap is already measured in billions.

Community and market reaction

The discussion has already moved beyond a single document. On the Zcash Community Forum, Josh Swihart proposed an even more radical option: shutting down the entire dev fund, not just ZCG. He also noted that the coinholder stream accumulates about 216 ZEC per day until the halving.

Ian Miers warned that moving funds into the NSM could turn it into a “dev-fund-in-waiting”.

That is an important remark. Miers believes such a scheme would complicate the issuance model and effectively become a miner payout with extra steps. According to him, the reserve will start flowing back into block rewards around 2031.

Against this backdrop, ZEC looked noticeably stronger. On October 27, 2026, the coin was trading around $1306.34, up 5.65% on the day. The intraday range was $1210.87–$1315.01. For the market, this means governance news can move the price just as much as technical upgrades.

• Bowe’s ZIP is still in Draft status.

• The document was created on October 26, 2026.

• It proposes redirecting 8% of the block reward.

• ZCG holds 91,452.98 ZEC and $8.796 million in assets.

• According to the authors’ estimate, the NSM could receive 144 ZEC per day.

• NU7 does not activate this change.

What does this mean for investors?

For long-term ZEC holders, this story matters not because of the headline, but because of the mechanics. If the funding pool changes, it will affect how the network supports development, legal defense, and infrastructure maintenance.

There are two scenarios here. First, the funds move to a more controlled model. Second, the community starts arguing even more about transparency and fairness in distribution. These kinds of conflicts often affect trust in a project more than the amount itself.

For traders, this is not a small matter either. ZEC is already trading around $1300, and the market capitalization, according to the coin page, is about $21.2 billion with 16.9 million ZEC in circulation. When an asset enters the top 10, any change in the rules of the game quickly gets priced in.

It is also worth watching the upgrade calendar. According to the forum, NU7 is scheduled at height 3,543,405, around November 5, 2026. It will reduce block spacing from 75 to 25 seconds. That is another sign that the ecosystem is preparing for changes on several fronts at once.

If the market wants to quickly lock in the result after the vote, it is convenient to sell Bitcoin on Monobank or another asset in a few steps.

Frequently asked questions

What is the Network Sustainability Mechanism in Zcash?

It is a mechanism to which 8% of the block reward is proposed to be directed instead of direct Zcash Community Grants payouts. The idea is to change the ecosystem funding model. But launching it requires a separate network upgrade.

Has this proposal already been approved?

No. At the moment, it is only a Draft without a number. The document does not include an activation height, and it is not part of NU7.

When could the change appear?

There is no exact date. For now, the only known fact is that NU7 is scheduled for around November 5, 2026, but this proposal requires a separate network upgrade.

For the market, the main thing is not the discussion itself, but its consequences. If the community agrees to the new model, Zcash will get a different funding structure. If not, the dispute over ZCG and NSM will continue to weigh on voting and expectations for a long time.

This material is not financial advice. Cryptocurrency trading involves significant risks. Part of this text was prepared with the help of artificial intelligence based on public sources and reviewed by our editorial team.