Crypto: Zcash Celebrates Its 10th Anniversary and Prepares for Major Change

Zcash celebrates its tenth anniversary on October 28, 2026, with an unusual funding model in the crypto space. Unlike Bitcoin, the network allocates 20% of block rewards to the development of its ecosystem. This strategy has been praised by Grayscale, which sees it as one of the reasons for its longevity. However, this mechanism is now under debate: a historical developer proposes to eliminate part of this funding, believing that the current reserves are more than sufficient.

In Brief

• Zcash celebrates its tenth anniversary with 20% of block rewards dedicated to development.
• Sean Bowe proposes to redirect the 8% allocated to community grants.
• The NU7 update, expected in early November, aims to 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 funding 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 is well acquainted with this crypto. In August, Grayscale launched its Zcash ETF on the American market, allowing investors to gain exposure to ZEC from a brokerage account. This time, its attention is focused on the economic functioning of the network.

On Bitcoin, miners receive the entirety of the new units created during block production. Zcash operates differently. Miners keep 80% of the new ZEC, while the remaining 20% funds development and research initiatives.

This funding is currently divided between two programs. The first, Zcash Community Grants (ZCG), receives 8% of total rewards. It funds technical projects and tools intended for the ecosystem. The remaining 12% feeds a funding mechanism controlled by ZEC holders.

This system has evolved since 2016. Initially, Zcash used a Founders' Reward intended for founders and early 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 downturn in the crypto market. The manager notably cites the different generations of confidential transactions: Sprout in 2016, Sapling in 2018, Orchard in 2022, and Ironwood in 2026.

A $125 Million Fund Revives the Debate at Zcash

However, this strategy is now the subject of renewed contestation. On October 26, Sean Bowe, a cryptographer and historical contributor to Zcash, presented a proposal aimed at modifying the distribution of rewards.

His goal: to eliminate the 8% automatically allocated to Zcash Community Grants. The funds in question would be transferred to the Network Sustainability Mechanism (NSM), a reserve intended to financially support the long-term security of the network.

Bowe believes that the community program already has significant resources. According to the figures presented in his proposal, ZCG holds approximately 91,453 ZEC and $8.8 million in dollar-denominated assets, from which $2.4 million in financial commitments must be deducted. With a valuation assumption of $1,300 per ZEC, the net reserve represents approximately $125.3 million.

This amount naturally varies with the token's price. The developer also compares the available resources to the program's expenses. In the first quarter of 2026, grant expenditures would have reached $1.53 million.

In the current conditions, the 8% rewards could represent over $68 million per year, based on the hypothetical price retained. The proposal aims to preserve the reserves already held by ZCG as well as the 12% intended for funding controlled by the holders.

However, not all developers share this approach. Josh Swihart, founder of ZODL, wants to go further by re-examining the two programs. Other contributors fear that excessive funding cuts could undermine security and maintenance work.

These disagreements come as Zcash has already gone through governance tensions affecting its developers' activities. For now, no changes have been adopted. Bowe's proposal remains a working document, without an activation date.

A New Crypto Milestone Expected on November 5

The anniversary of Zcash also comes after an important year technically. In July, the network activated Ironwood, a new generation of its privacy infrastructure. This update addresses a vulnerability discovered in Orchard. The issue concerned the risk of unauthorized creation of ZEC and required an emergency fix.

Ironwood introduces new cryptographic guarantees and mechanisms facilitating the recovery of funds in certain scenarios related to quantum computing. Grayscale cites this evolution among the achievements made possible by regular developer funding.

Another deadline is approaching. The NU7 update is set to be activated around November 5, at block 3,543,405. It will reduce the target time between two blocks from 75 to 25 seconds. Transactions will thus receive their first confirmation approximately three times faster.

This acceleration will not triple the creation of ZEC. The rewards per block will be adjusted to maintain the issuance schedule and the cap of 21 million units.

NU7 will also introduce a mechanism temporarily removing 60% of transaction fees from circulation. Their gradual reintroduction into block rewards is set to begin in February 2031. The Zcash Foundation has already released Zebra 7.0.0, a version of the node software compatible with this update.

Users now have a more precise timeline than during the initial announcements. The speed targets for NU7 had already been detailed in September. However, Sean Bowe's proposal regarding the 8% grants is not included in this update. It would require a subsequent modification of the protocol. Ten years after its creation, Zcash continues to invest in privacy. Grayscale advocates for the funding that has accompanied these advancements. A part of the community now wishes to review how this money is distributed.