Grayscale credits Zcash’s 20% developer funding for a decade of upgrades

Grayscale Research is arguing that the most important feature of Zcash is not its shielded transactions but its funding structure: one-fifth of every new block reward is set aside for builders. According to Cryptobriefing, the asset manager’s October 2026 report says that arrangement has paid for close to ten years of work on the network, with the NU7 upgrade due on November 5, 2026.

Crypto.news reported the same research on October 27, tying it to Zcash’s tenth anniversary on October 28. That outlet quoted Zach Pandl, Grayscale’s head of research, saying the allocation allowed the network to keep improving its technology even during long bear markets and stretches of weak token performance.

Key facts

• Zcash routes 20% of block rewards to development and ecosystem funding; miners keep the other 80%, per Grayscale’s research.
• The 20% divides into 8% for Zcash Community Grants and 12% for the Coinholder-Directed Retroactive Grants Program, Crypto.news reported; Cryptobriefing described the latter share as a development fund lockbox.
• Grayscale said the Zcash Trust drew $41.09 million in net inflows, while ZEC fell about 25% through October.
• Zcash launched on October 28, 2016; its original Founders’ Reward also set aside 20% and ended with the Canopy upgrade in November 2020.
• In July 2026 developers activated Ironwood after spotting a flaw in Orchard’s zero-knowledge proof circuit that could potentially have allowed undetectable counterfeit ZEC, Crypto.news reported.

Where the money goes

Zcash has carved out a developer share since its first block. The Founders’ Reward of the network’s first four years took the same 20%, then the Canopy upgrade in November 2020 changed both the recipients and the governance around them. Fund allocation is now split between two grant programs, and Grayscale argues that steady access to research and engineering money has kept work going without leaning entirely on venture capital or private investors.

The two reports describe the 12% portion differently: Cryptobriefing calls it a lockbox where funds accumulate until the community decides how to deploy them, while Crypto.news describes it as the Coinholder-Directed Retroactive Grants Program, under which eligible ZEC holders vote on funding for completed work. The two descriptions are not mutually exclusive, but the emphasis differs by outlet.

The Ironwood upgrade and what it fixed

Grayscale pointed to Zcash’s successive shielded layers as evidence that the funding model produced results. The network opened with Sprout, added Sapling in 2018 and Orchard in 2022, each changing how shielded funds are handled. Ironwood followed in July 2026, after a vulnerability in Orchard’s proof circuit raised the possibility of counterfeit coins going unnoticed. Crypto.news reported that the upgrade took effect at block height 3,428,143 on July 28 with separate accounting protections, formal verification of supply-integrity properties, and quantum-recoverable notes meant to support future recovery if quantum computing threatens current cryptography. The outlet noted that those notes do not by themselves make Zcash quantum-resistant.

Recent grant decisions, meanwhile, show the program in use. Crypto.news reported that holders approved $8.39 million across 17 of 37 proposals in the third-quarter retroactive round. The list included $1.5 million tied to researcher Taylor Hornby’s discovery of the Orchard flaw, $1.95 million for Zcash Open Development Lab, roughly $1.2 million for ValarGroup’s Ironwood work, $738,942 for formal verification of Ironwood’s circuit and $599,000 for external audits. Those figures are approvals, not completed payouts, since some payments still need administrative and compliance checks.

Why it matters

The 20% carve-out changes what Zcash’s issuance economics look like relative to Bitcoin, where miners collect the full subsidy. Every block sends a slice of new supply toward governance decisions rather than security, and the 12% tranche means a growing pool of money will eventually be spent on choices that shape how investors judge the network. Grayscale’s endorsement also comes from a firm with a direct stake: it runs the Zcash Trust, a point Cryptobriefing flagged in its report. Crypto.news noted separately that the community has been divided over a $550,000 adult-industry outreach grant.

What to watch

NU7 is the near-term referee. If it lands on November 5, 2026 and shortens blocks to 25 seconds as intended, Grayscale’s case gains a concrete example; a delay would undercut it. Crypto.news also reported that the retroactive grants round opens for proposals from October 30 to November 13, with voting scheduled for December 17–29, and that Pandl has named transaction capacity, quantum computing and AI-driven security threats as areas needing further research.

Nothing here is a forecast of where ZEC will trade; the market is volatile and uncertain, and this article is not financial advice.

Disclaimer: This article is for information only and is not investment, financial or trading advice. Cryptocurrency prices are highly volatile. Always do your own research.

Sources: Crypto Briefing, Crypto.news