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

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 has triggered calls to dismantle the grants program that has funded development.

Competing proposals emerge

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. He noted that ZCG has more than $125 million in funding and would receive millions more before the proposed cutoff.

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.

Tyler Winklevoss endorsed ending the grants arrangement, declaring, "It's time to end the USAID of Zcash." Swihart argued that eliminating only ZCG's allocation would leave the underlying controversy unresolved, proposing instead to eliminate both funding streams and redirect their allocations to the NSM.

Alternative plan extends funding

The push to dismantle development funding is facing an alternative proposal from community contributor Dismad, who suggested 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 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.

Growing popularity raises stakes

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. The 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. The rally has coincided with increased usage of the network's privacy features, with shielded transactions accounting for roughly 62% of activity, up from about 24% during the same period in 2025.

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. The network processed an average of approximately 11,300 transactions daily in late October, an increase of about 70% from a year earlier.