Here’s why Zcash could remove 50,000 ZEC from its grants treasury

The Zcash [ZEC] community is gearing up to vote on a proposal that could significantly change how ZEC funds its development and distributes newly created tokens. The plan involves removing 50,000 ZEC from the Zcash Community Grants (ZCG) treasury and redirecting its value toward future mining rewards.

That said, Zcash currently allocates 8% of newly issued ZEC to ZCG, which uses the funds to support developers, wallet providers, and other ecosystem projects.

These grants help maintain the infrastructure and software needed to use ZEC. However, rising ZEC prices has increased the value of ZCG’s existing treasury, which has raised concerns that the committee was accumulating more funds than necessary while continuing to receive new token allocations.

All about Zcash’s new proposal

However, now, under the new proposal, approximately 55% of ZCG’s treasury (50,000 ZEC) would be removed from circulation within 30 days of activation. Going ahead, its value would be credited to the Network Sustainability Mechanism, introduced through the NU7 upgrade. This, in turn, would gradually return ZEC to the network through future mining rewards.

At the same time, the proposal would also end ZCG’s existing 8% allocation of newly created ZEC. Instead, this share would accumulate in a new Future Dev and Legal Defense Fund until the next halving takes place.

As this happens, the fund would remain inaccessible until a separate proposal establishes withdrawal rules. Lastly, ZCG would retain its remaining treasury to continue funding development, while the separate 12% Coinholder-Controlled Fund would remain unchanged.

How is Zcash’s new proposal different from the old one?

For those unaware, the revised plan follows ZCG’s 3rd November decision to abandon an earlier proposal, which faced criticism for seeking to redirect approximately 98,000 ZEC from existing assets and future income toward mining rewards.

So, now, the next step is community voting, which is scheduled from 16th November to 30th November. Coinholders and community panels will assess the proposal’s support.

If it receives rough consensus, developers, and miners can work toward implementing it through a future network upgrade called NU7.1. However, there is no confirmed activation date yet. 

Zcash market dynamics paint a mixed picture

This coincided with Zcash’s monthly active developer count having nearly doubled over the past two years.

According to Glassnode’s report, around 70% of its active developers have more than one year of experience in crypto development, compared with 58% across the wider industry.

Still, ZEC’s price action was under bearish pressure as it was trading at $986.40 at press time after a drop of 1.4% in the past 24 hours.

This followed a recent report by AMBCrypto wherein ZEC fell by 15.25% and Open Interest also declined 13.4%, indicating weakening speculative demand.

Final Summary

• Approximately 55% of ZCG’s treasury would be removed from circulation within 30 days of activation.
• The revised plan came after ZCG’s 3rd November decision was rejected due to the expected 98,000 ZEC figure.