Zcash’s $125 million funding fight widens as Tyler Winklevoss calls to end its ‘USAID’

Zcash faces competing proposals to scrap or extend developer subsidies as growing investor interest swells the privacy network's funding reserves.

The debate intensified after Zcash co-founder Sean Bowe proposed ending automatic payments to Zcash Community Grants (ZCG), arguing that the program already controls enough resources to finance years of development without additional subsidies.

His proposal has drawn more aggressive demands from ZODL founder Josh Swihart, Gemini co-founder Tyler Winklevoss, and other ecosystem participants, while a rival plan would preserve reduced development funding until 2036.

The disagreement comes as Zcash approaches its 10th anniversary on Oct. 28, with renewed institutional interest and rising private transaction activity increasing scrutiny of how the network allocates newly created ZEC.

Zcash's $125 million treasury triggers calls to dismantle grants program

In an Oct. 26 draft proposal, Bowe called for redirecting ZCG's 8% share of block rewards into the Network Sustainability Mechanism (NSM), a protocol reserve that would eventually support future block rewards. Bowe said on X:

“It's time to turn off the ZCG funding stream.”

He added that ZCG has more than $125 million in funding and would receive millions more before the proposed cutoff, arguing that the program was never designed to manage such substantial resources.

The figure is based on approximately 91,453 ZEC, $8.8 million in dollar-denominated assets, and $2.4 million in outstanding obligations, assuming ZEC trades at $1,300.

At that valuation, ZCG's annual allocation would be worth approximately $68.3 million, compared with $6.12 million in annualized expenses based on its first-quarter spending.

Bowe's proposal would preserve the program's existing assets and leave the separate 12% coinholder-controlled funding stream untouched.

However, Maxime Desalle proposed going further by dissolving ZCG entirely, stopping new grant approvals and transferring its remaining treasury to the NSM after fulfilling existing commitments.

Desalle argued that ZCG's governance structure lets a small community advisory panel influence spending despite the wider economic costs borne by ZEC holders.

He also disclosed his involvement with Cypherpunk, a major Zcash mining company, through his work, while maintaining that the proposal was independent of his employment.

Bowe later said he would personally support considering transferring ZCG's existing treasury, though he preferred to separate that decision from his proposal to stop future payments.

Winklevoss and Swihart push for broader cuts as rival plan emerges

The dispute has expanded beyond ZCG's future.

Tyler Winklevoss endorsed ending the grants arrangement, declaring, “It's time to end the USAID of Zcash.”

Swihart, meanwhile, argued that eliminating only ZCG's allocation would leave the underlying controversy unresolved. He said:

“It'd be a mistake to kill only one part of the dev fund. If dissolved, then no half measures, dissolve it all, both the ZCG and coinholder streams.”

Swihart pointed out that the coinholder-controlled program receives approximately 216 ZEC daily, creating a similar accumulation problem as the cryptocurrency appreciates.

He proposed eliminating both funding streams and redirecting their allocations to the NSM, honoring existing grant obligations before transferring remaining eligible funds.

Swihart also suggested a one-time, coinholder-approved legal defense endowment for Zcash developers. He said:

“A half measure leaves the door open to ongoing debate and politics. Markets like certainty.”

Notably, Swihart acknowledged that his company, ZODL, recently received a retroactive coinholder grant for core protocol development and could seek additional funding if the program survived. His proposal would eliminate that potential source of financing.

Yet the push to dismantle development funding is facing an alternative.

In an Oct. 27 draft, community contributor Dismad proposed gradually reducing the combined developer allocation from 20% to 10% around the 2028 halving, then to 5% in 2032, before eliminating it in 2036.

That approach would preserve existing governance arrangements while giving developers another decade of progressively declining protocol funding.

The competing plans would therefore produce substantially different outcomes: Bowe would end new ZCG payments, Desalle would dismantle the grants institution, Swihart would eliminate the entire development fund, and Dismad would extend a reduced version beyond its scheduled 2028 expiration.

Zcash's growing popularity raises stakes for future development

The growing calls to eliminate development subsidies contrast with Grayscale's view that protocol-funded research has kept Zcash technologically competitive over the past decade.

The asset manager highlighted the network's successive privacy upgrades, including Sapling, Orchard and the recently introduced Ironwood pool, as examples of improvements supported by dedicated development financing.

Grayscale argued that continued investment would be necessary to expand transaction capacity, prepare for quantum-computing threats and address emerging cybersecurity risks.

It said future innovation “will likely require ongoing financial support for developers from a variety of sources,” alongside more efficient capital allocation.

That assessment comes as Zcash sees substantial growth in both market value and network activity.

According to ZecStats, ZEC has gained about 260% over the past year, trading above $1,200 and pushing its market capitalization past $20 billion. The token has also appreciated roughly twentyfold since the beginning of 2025, when it traded near $60.

The rally has coincided with increased usage of the network's privacy features.

ZecStats data shows that Zcash processed an average of approximately 11,300 transactions daily in late October, an increase of about 70% from a year earlier. Shielded transactions accounted for roughly 62% of activity, up from about 24% during the same period in 2025.

Meanwhile, approximately 4.96 million ZEC, representing 29% of issued supply, are held in shielded pools that allow users to conceal transaction information.

The expansion has also reached traditional investment markets. Grayscale's Zcash exchange-traded product (ZCSH) reported approximately $708 million in net assets as of Oct. 26, reflecting the scale of institutional investment exposure that has developed around the cryptocurrency.