Grayscale (@Grayscale) says Zcash’s (@Zcash) $ZEC practice of directing 20% of block rewards to development has supported nearly a decade of progress on the privacy-focused network. Zcash marks its 10th anniversary on October 28.
How Zcash splits block rewards
Miners receive 80% of each block reward. The remaining 20% goes to development and ecosystem work. Of that, 8% funds community grants and 12% goes into a development fund lockbox, according to Grayscale's research as reported by Crypto Briefing. Funds in the lockbox stay in reserve until the community decides how to deploy them.
The model differs from Bitcoin, where miners receive the full block subsidy. In an October 26 research report, Grayscale's head of research, Zach Pandl, said the arrangement has helped Zcash keep improving its technology through prolonged bear markets and periods of weak token performance.
The funding idea is not new. Zcash launched in October 2016 with ecosystem financing built in. The original version was called the Founders’ Reward, which also took 20% of block rewards. That arrangement ended with the Canopy upgrade in November 2020, when the network moved to a development fund model. The percentage stayed the same, but the recipients and governance changed.
Grayscale points to the network's successive shielded pools, from Sprout to Sapling and Orchard, as products of that funding. It also highlights the Ironwood upgrade introduced this year, which adds quantum-resistant address recovery and formal verification to address code vulnerabilities, according to ChainCatcher's summary of the report. Looking ahead, Grayscale expects Zcash to keep expanding transaction capacity and preparing for post-quantum and AI-driven security risks. Those efforts may require sustained funding from multiple stakeholders.
Price slips while fund inflows return
Market performance has lagged the commentary. ZEC is down more than 15% in October and was trading around $1,200 on Monday, according to TradingView News.
Fund flows have been firmer. Grayscale’s Zcash Trust recorded four consecutive daily inflows last week, totalling $41.09 million, based on SoSoValue data. The result followed three straight weeks of withdrawals. BeInCrypto reported that those outflows totalled $143.4 million, and that the latest week was the fund's biggest intake since September.
The inflows arrive ahead of Zcash’s Network Upgrade 7 (NU7), scheduled for November 5. Crypto Briefing reports that NU7 aims to cut the block interval from 75 seconds to 25 seconds. Whether the renewed demand leads to a sustained price recovery remains to be seen. For now, Grayscale's argument is that a built-in funding stream for developers, rather than token price alone, has kept Zcash's technical roadmap moving through its first ten years.
Sources:
Crypto Briefing: Grayscale credits Zcash's 20% developer funding with a decade of innovation
TradingView News: Zcash price rebounds as ETF inflows hit $41M
BeInCrypto: ETF investors pouring millions back into Zcash as Bitcoin falls