ZEC Jumped 10.5% After Zcash Community Grants Dropped a Plan to Redirect 98,000 ZEC. Why Did Holders Object?

Zcash (CRYPTO:ZEC) surged 9.5% in 24 hours after the Zcash Community Grants (ZCG) announced that it would no longer pursue a plan to redirect about 98,000 ZEC from the Zcash dev fund to future mining rewards. This shift largely responded to backlash from ZEC holders, and the move put ZEC back at 10th by market value.

ZEC is trading at $1,307, which reflects a recovery from recent lows. While ZEC is up 2% over the last week, it has dropped 0.9% over the past month and remains 59% below its all-time high of $3,192 reached in 2016.

The question arises: Did the decision to drop the plan affect ZEC’s price, and why did holders oppose a proposal that seemed to offer benefits?

ZCG’s Plan Would Have Moved 98,000 ZEC Into a Mining Reserve

ZCG is funded by a portion of the block reward, which is the new ZEC generated each time miners add a block to the blockchain. In a forum post dated October 29, ZCG said its current 8% share of each block is generating far more revenue than it can effectively use. As ZEC’s value has soared by 199% over the past year, this steady income stream has created a sizable reserve.

The proposal aimed to gradually reduce ZCG’s funding by about 3% each month until the 2032 halving, which would cut the block reward in half. Under the plan, ZCG would receive approximately 47,000 ZEC by the 2028 halving, compared to an expected 109,000 under existing rules. Additionally, ZCG would forfeit about 36,200 of the roughly 91,500 ZEC it currently holds, which is valued at around $120 million.

Overall, the plan would have redirected about 98,000 ZEC, worth approximately $128 million, into the Network Sustainability Mechanism (NSM). This mechanism is designed to ensure that miners continue to be compensated as block rewards decrease over the years.

Holders Wanted the Zcash Dev Fund Cut Off, Not Extended to 2032

Critics argued the proposal would only prolong ZCG’s funding without ZEC holders’ consent. Since ZCG’s automatic funding is set to end in 2028, the plan effectively stretched a smaller stream out to 2032.

Zcash co-founder Sean Bowe had already suggested a different approach in a draft proposal: terminate ZCG’s funding at the NU8 upgrade, pay out already approved grants, and direct any remaining funds to the NSM. On the messaging platform X, Helius co-founder Mert Mumtaz criticized ZCG’s proposal, calling it “nowhere near good enough,” and supported Bowe’s suggestion to cut off funding.

A Zcash Foundation contributor, under the pseudonym secparam, also raised concerns about the NSM approach, warning that allocating dev fund money to this reserve could lead to a situation where funds could be redirected later.

In light of the community’s feedback, ZCG decided to drop the proposal, stating in a forum post on November 3 that the community should decide the dev fund’s future.

ZEC Outperformed Bitcoin, Ethereum and Solana After the Withdrawal

However, the withdrawal of the plan doesn’t fully explain the price increase. On November 2, ZEC closed at $1,133, then jumped to $1,218 following the announcement. The later rise to $1,307 coincided with a broader market rally.

Over 24 hours, Bitcoin (CRYPTO:BTC) rose 3.7%, Ethereum (CRYPTO:ETH) rose 6%, and Solana (CRYPTO:SOL) rose 3.3%. However, over the past 30 days, ZEC fell slightly by 0.9%, while Bitcoin and Ethereum dropped 6% and 10.1%, respectively, and Solana fell 19.7%. ZEC has shown greater volatility, with a remarkable 164% increase over the past 90 days, indicating that market-wide upswings often have a greater impact on ZEC.

Monero (CRYPTO:XMR), another prominent privacy coin, has gained 14.2% over 30 days but saw only a small gain of 2.6% in 24 hours. This suggests that if buyers were indeed flocking to privacy coins collectively, Monero might have performed better.

ZEC Is Approaching Its 50-Day Average Ahead of the NU7 Upgrade

Currently, ZEC is trading above its 20-day moving average of $1,217 and its 200-day average of $751. However, it is just below its 50-day moving average of $1,316, approximately 0.7% below the current trading price.

Selling pressure has emerged near these levels. ZEC is still around 4% below its 30-day high of $1,365 reached on October 6. On October 29, ZEC hit a session high of $1,397 before closing at $1,220 on heavy volume. Trading volume during the bounce on November 3 was about 11% lower than during the selloff on November 2, suggesting less buyer conviction.

Looking ahead, ZEC prepares for the NU7 upgrade, anticipated to activate at block 3,543,405 around November 5. This upgrade will reduce the block time from 75 seconds to 25 seconds. Such upgrades typically generate buying interest leading up to the event, followed by profit-taking after launch. However, delays or technical issues could hurt a coin that has just risen on the back of these expectations.

Can ZEC Hold Its Gains Before the Zcash Dev Fund Decision?

ZEC holders have expressed concern over plans to extend the Zcash development fund for an additional four years without their consent. Traders could interpret the recent withdrawal as a move that could open the door to more stringent proposals, such as the one proposed by Bowe, but no new rules have been passed, and the Zcash Community Grants (ZCG) continue to take 8% from every block mined.

Ideas being discussed in forums range from Bowe’s draft proposal to a “Dev Fund Soft Landing” plan and coinholder polls weighted by locked ZEC.

The upcoming sessions will reveal how much of ZEC’s price movement is tied to this governance debate. If ZEC closes below its 20-day average of $1,217—about 7% lower—after NU7 activates, it may indicate the price surge was driven more by market momentum and expected upgrades. Conversely, if ZEC climbs above its 50-day average of $1,316 and holds there during the upgrade period, while a proposal to reduce funding gains traction, it could suggest the market favors a smaller development fund.

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