I’m proposing that the Coinholder Grants Program, which will be seeded by the existing lockbox and receive 12% of block rewards through the third halving in 2028, be structured as a retroactive grants program. This proposal, outlined below, will ultimately require coinholder approval before being implemented. I presented this concept at the Z|ECC Summit in Prague and have outlined the full details below. Thank you to @alex_zf, @joshs, and all Z|ECC Summit attendees for their helpful feedback.
Background
In November 2024, the Zcash community adopted ZIP 1015 as a temporary funding model. This allocated 8% of block rewards to Zcash Community Grants (ZCG) and 12% to a protocol lockbox to ensure continued funding for development while the community worked toward a long-term solution. ZIP 1015 was guided by several principles: ending direct funding to specific organizations, transitioning to a grants-based model, decentralizing governance, and creating transparent processes for distributing funds.
ZIP 1015 is set to expire in November 2025. At that point, the Community and Coinholder Funding Model (C&C) will take effect, directing future block rewards to a Coinholder Grants Program and Zcash Community Grants. The C&C model will remain in place until Zcash’s third halving in 2028 and is intended to support a more decentralized, community-driven funding process.
Community and Coinholder Funding Model
As part of Network Upgrade 6.1 (NU6.1), Zcash will implement the Community and Coinholder Funding Model. Under this model, ZIP 1016 states:
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12% of block rewards will flow to the Coinholder Grants Program from November 2025 until Zcash’s third halving in 2028.
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8% of block rewards will continue to fund Zcash Community Grants (ZCG) during this period.
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Initial capital for the Coinholder Grants Program will come from the Deferred Dev Fund Lockbox, which will hold approximately 70,000 ZEC when the C&C funding model goes into effect.
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Keyholder Organizations will manage these funds via a legally binding multisig wallet. Keyholders are required to execute coinholder-approved funding decisions but retain veto authority if proposals pose legal, regulatory, or community-harm concerns. At the start, the three keyholder organizations will be ECC, ZF, and Shielded Labs.
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This model places direct control of grant allocations in the hands of coinholders, ensuring funding decisions reflect community priorities. A minimum participation threshold of 420,000 ZEC (roughly 2% of total supply) ensures meaningful voter engagement.
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While ZIP 1016 mandates a clear, transparent process for evaluating proposals and gathering community input, the specific voting mechanism will be defined separately in a future ZIP. This proposal (outlining a retroactive grants program) represents the process that is intended to be formalized in that future ZIP.
Coinholder-Directed Retroactive Grants Program
I propose that the Coinholder Grants Program be structured as a retroactive grants program. Under this model, grants would be awarded only for work that is already fully completed, rather than funding work based on milestones as ZCG does. This approach is intended to simplify the grants process, reduce administrative complexity, and ensure accountability by paying only for completed and verifiable work.
The existing ZCG model is not a good fit for the Coinholder Grants Program. Milestone-based grant programs like ZCG require constant oversight, fund management, and ongoing coordination with grantees, which makes it too complex for a coinholder-driven process.
For example, when ZCG approves a grant, the Financial Privacy Foundation (FPF), which administers the program, converts the approved amount of ZEC to USD to protect against price volatility and ensure the grant can be fully paid. A retroactive grants program avoids this entirely: since funding is awarded after work is completed, payouts can be made directly from the multisig wallet at the current market price, without hedging or complex fund management. While it may not be suitable for every project, the retroactive model provides a scalable solution that works well with coinholder voting.
FPF will administer the Coinholder Grants Program, but in a more limited role than ZCG focused on managing the grant submission process, performing KYC checks for grants above $50,000, and maintaining transparency reporting. FPF may request a small administrative fee from coinholders to cover these responsibilities.
Benefits of Retroactive Grants
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Grants are awarded only for work already completed, reducing the risk of paying for incomplete or low-quality work.
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Simplifies the process by focusing solely on evaluating delivered work, removing the need for milestone tracking or ongoing approvals.
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Avoids the complexity and high-touch oversight required by milestone-based models like ZCG, making it a better fit for coinholder voting.
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Minimizes administrative overhead and allows projects to operate independently.
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Enables direct payouts from the multisig wallet without complex fund management or hedging.
Drawbacks of Retroactive Grants
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Requires teams to self-finance their work before applying for funding, which may discourage smaller or less-capitalized participants.
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Higher risk for builders, as they could complete the work but still not receive funding if coinholders decide their proposal isn’t worthwhile. However, if a proposal is rejected, the team can still submit it for consideration through ZCG.
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Teams may be hesitant to pursue larger or riskier projects without the security of milestone-based, upfront commitments.
Three Distinct Grant Programs
With this new retroactive grants program, Zcash will operate three distinct grant programs:
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Zcash Community Grants (ZCG): Flexible grants program with a large budget. Milestone-based funding for medium and large projects. Grants are paid as work progresses. The committee is also open to approving retroactive grants in certain circumstances.
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Coinholder Grants Program: A quarterly grants program structured for retroactive funding, where grants are awarded only for completed work. This program is best suited for teams that can complete their projects before applying for funding. It offers a straightforward process focused on rewarding delivered results.
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ZecHub Bounty Program: A ZCG-funded program run independently by ZecHub that provides small grants and bounties for grassroots community and educational initiatives. Designed to offer quick and easy funding for smaller contributions.
Coinholder Grants Program: Process Overview
The Coinholder Grants Program will operate as follows:
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Public Call for Proposals: At the start of each quarterly cycle, a public call for proposals is issued via forums, social media, and blog posts. Proposals must be submitted via GitHub and mirrored on community forums for visibility and feedback. FPF will administer this process.
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Proposal Structure: This program uses a retroactive grants model. Applicants submit proposals for work already completed. Funding requests are denominated in USD, but paid in ZEC from a multisig wallet.
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Submission Deadlines: Proposals must be submitted at least 30 days before voting begins. Keyholder Organizations conduct an initial review and retain veto authority if proposals pose legal, regulatory, or community-harm concerns.
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Proposal Summary: Before polling, a summary of all proposals is published by FPF. This includes total requested funding, potential treasury impact, and historical funding outcomes to help coinholders evaluate spending decisions.
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Voting Process: Each proposal is voted on individually as a Yes/No question. A minimum participation threshold of 420,000 ZEC per proposal is required. Proposals require a simple majority to pass. An open question remains whether partial funding should be permitted if a proposal’s full request cannot be met.
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Voting Results / Approved Proposals: Approved proposals are ranked by total “Yes” votes and funded in sequence until the treasury budget is exhausted. Payments are made directly from the multisig wallet, without requiring fund management or hedging.
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Disbursement & Oversight: Payments are made only after deliverables are verified. KYC checks are required before disbursements above $50,000. Keyholders retain authority to pause or veto payments post-approval if legal or ethical issues arise.
Implementation Timeline
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July 2025 – Gather Community Sentiment: Collect feedback at the Z|ECC Summit and from the broader Zcash community.
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August 2025 – Coinholder Ratification Vote: Continue gathering community input. Also, open the coinholder registration period and vote to ratify the retroactive grants program and resolve open questions (e.g. whether partial funding should be allowed if a proposal can’t be fully funded).
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September 2025 – Call for Proposals: Issue a public call for proposals via Zcash Community Forum and other community channels.
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October 2025 – Proposal Review Period: Proposals are discussed publicly on the Zcash Community Forum and GitHub. The submission deadline is set for 30 days before the vote.
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November 2025 – Coinholder Vote on Proposals: Open a coinholder registration period followed by a vote to approve or reject submitted proposals.
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December 2025 – Fund Distribution: Funds are distributed to approved proposals via the multisig wallet.
Conclusion
This proposal outlines a scalable, easy-to-implement retroactive grants program that’s designed to put funding decisions directly in the hands of ZEC holders. Please let me know if you have any questions, comments, or feedback. I’m looking forward to a vibrant and productive discussion!
PS: We need a name for this program. Please let me know if you have any suggestions.
Questions For Coinholders
- Should the Coinholder Grants Program be limited to retroactive grants only?
- Should partial funding be allowed if a proposal can’t be fully funded?
- Should the Coinholder Grants Program accept transparent ZEC or be limited to shielded ZEC to incentivize shielded adoption (after Ledger adds shielded support and/or once engagement is assessed after the first round of grant polling)?