#Terminology

The key words "MUST", "MUST NOT", "SHALL", "SHOULD", "SHOULD NOT", and "MAY" in this document are to be interpreted as described in BCP 14 ¹ when, and only when, they appear in all capitals.

The terms "Mainnet", "Testnet", "block subsidy", "funding stream", "coinbase transaction", "chain value pool balance", and "Issued Supply" have the meanings given in the Zcash Protocol Specification ²; the character § refers to its sections.

"Zcash Community Grants" ("ZCG"), the "ZCG Committee", the "Financial Privacy Foundation" ("FPF"), and the "Deferred Dev Fund Lockbox" have the meanings given in ZIP 1015 ³.

The "Network Sustainability Mechanism" ("NSM") and the "NSM Value Balance" have the meanings given in ZIP 237 ⁴: ZEC removed from circulation is added to the NSM Value Balance, and returns to circulation through future block subsidies.

#Abstract

This ZIP makes two changes.

1. ZCG's 8% funding stream ends when this ZIP activates. For the rest of that stream's term, the same 8% of the block subsidy goes into a new lockbox, the Future Dev and Legal Defense Fund Lockbox, which holds it for future Zcash development and legal defense.

2. The ZCG Committee donates 50,000 ZEC to the NSM within 30 days of this ZIP's acceptance, by sending it to an address that no one can spend from. When this ZIP activates, everything sent to that address is removed from circulation and added to the NSM Value Balance.

#Motivation

The rapid rise in the price of ZEC has enlarged the monetary value of ZCG's treasury to a much greater amount than ever before. This ZIP reduces the risks and pressure that come with large amounts of money, donates to the Network Sustainability Mechanism (providing increased long-term issuance), and accrues funds in a lockbox for future use by the Zcash community.

ZCG's dashboard reports holdings of 91,452.98 ZEC and $8,796,224, against $2,417,165 of outstanding grant liabilities ⁵. FPF reported $4,718,359 of ZCG expenses in the first half of 2026, about $9.4 million a year ⁶. The 8% stream adds another 144 ZEC a day, 52,560 ZEC a year; at $1,300 per ZEC, that is about $68 million a year, more than seven times ZCG's spending ⁷.

ZCG's treasury before and after the donation, at $1,300 per ZEC (details ⁸):

#Privacy Implications

The lockbox adds no addresses, keys, or notes. The donation is a public transparent payment to a published address. This ZIP leaves the privacy of every transaction unchanged.

#Specification

#Activation

Let $A$ be this ZIP's activation height on a network, and $N$ that network's NU7 activation height; $A$ MUST be greater than $N$. Let $E$ be the end height of FS_FPF_ZCG_H3 under Revision 3 of ZIP 214 ⁹: the third halving under ZIP 218's 25-second blocks ¹⁰, $E=N+3\cdot (H_3-N)$, where $H_3$ is the pre-NU7 third-halving height (4406400 on Mainnet, 4476000 on Testnet). With Mainnet's $N=3543405$ ¹¹, $E=6132390$. End heights are exclusive, as in ZIP 207 ¹².

The lockbox rules below apply on a network where $A<E$; where $A\ge E$, the ZCG stream has already ended, and they change nothing. The NSM donation address rules apply from $A$ on every network.

#The Future Dev and Legal Defense Fund Lockbox

The Future Dev and Legal Defense Fund Lockbox holds funds for future Zcash development and legal defense. No one can spend from it until a future ZIP specifies how.

Funding streams. A new revision of ZIP 214 makes these changes at $A$:

• The end height of FS_FPF_ZCG_H3 becomes $A$. Its recipient list keeps the addresses for the address periods before $A$, as ZIP 207 computes them, including ZIP 2008's change ¹³.
• A new funding stream, FS_FDLDF_H3, pays 8/100 of the block subsidy from height $A$ to height $E$, to the recipient $𝖥𝖣𝖫𝖣𝖥\_𝖯𝖮𝖮𝖫$ in every address period.

FS_CCF_H3 and the Deferred Dev Fund Lockbox are unchanged.

The recipient. A new revision of ZIP 207 adds the recipient identifier $𝖥𝖣𝖫𝖣𝖥\_𝖯𝖮𝖮𝖫$, which works as $𝖣𝖤𝖥𝖤𝖱𝖱𝖤𝖣\_𝖯𝖮𝖮𝖫$ does ¹⁴: a stream paid to it produces no coinbase output, and its value goes into the lockbox's balance instead. In § 7.8 and § 7.1.2, define $𝗍𝗈𝗍𝖺𝗅𝖥𝖣𝖫𝖣𝖥𝖮𝗎𝗍𝗉𝗎𝗍(h)$ as the sum of $𝖿𝗌.𝖵𝖺𝗅𝗎𝖾(h)$ over the streams paid to $𝖥𝖣𝖫𝖣𝖥\_𝖯𝖮𝖮𝖫$ at height $h$, and add it to the coinbase transaction's $𝗍𝗈𝗍𝖺𝗅𝖮𝗎𝗍𝗉𝗎𝗍𝖵𝖺𝗅𝗎𝖾$, beside $𝗍𝗈𝗍𝖺𝗅𝖣𝖾𝖿𝖾𝗋𝗋𝖾𝖽𝖮𝗎𝗍𝗉𝗎𝗍(h)$.

The balance. In § 4.17, add the lockbox's chain value pool balance,

$𝖥𝖣𝖫𝖣𝖥𝖡𝖺𝗅𝖺𝗇𝖼𝖾(h):={\sum }_{i=0}^h𝗍𝗈𝗍𝖺𝗅𝖥𝖣𝖫𝖣𝖥𝖮𝗎𝗍𝗉𝗎𝗍(i),$

and include it in $𝖨𝗌𝗌𝗎𝖾𝖽𝖲𝗎𝗉𝗉𝗅𝗒(h)$. Add it to the pools of ZIP 209 ¹⁵, whose balances MUST be nonnegative and whose sum MUST NOT exceed $𝖬𝖠𝖷\_𝖬𝖮𝖭𝖤𝖸$. No consensus rule moves value out of it.

#The NSM donation address

The NSM donation address is the Mainnet P2SH address

t3QZUHYkaEQEuWosAc9HgMPKiQRdvuBPCQZ

Its script hash, 41c98a140039816273e50db317422c11c2bfcc88, is HASH160 of the one-byte script 6a, OP_RETURN, which fails whatever a spender supplies. To check this, decode the address with Base58Check, confirm its version prefix (1cbd) and checksum, and compare its script hash with HASH160 of the byte 0x6a. Spending from it would require a second script with the same HASH160.

Let $𝖣𝗈𝗇𝖺𝗍𝖾𝖽𝖵𝖺𝗅𝗎𝖾(h)$ be the total value of the transparent outputs in block $h$, in any transaction including the coinbase transaction, whose script is exactly the P2SH script a91441c98a140039816273e50db317422c11c2bfcc8887. From $A$ on:

• A transaction MUST NOT spend an output with that script.
• At height $A$, the value of every such output up to and including block $A$, ${\sum }_{i=0}^A𝖣𝗈𝗇𝖺𝗍𝖾𝖽𝖵𝖺𝗅𝗎𝖾(i)$, is removed from circulation; at each later height $h$, $𝖣𝗈𝗇𝖺𝗍𝖾𝖽𝖵𝖺𝗅𝗎𝖾(h)$ is. Call this amount $𝖭𝖲𝖬𝖣𝗈𝗇𝖺𝗍𝗂𝗈𝗇𝗌(h)$. In § 4.17, the transparent chain value pool balance decreases by $𝖭𝖲𝖬𝖣𝗈𝗇𝖺𝗍𝗂𝗈𝗇𝗌(h)$, and ZIP 237's list of mechanisms for removal from circulation gains the source $𝖭𝖲𝖬𝖣𝗈𝗇𝖺𝗍𝗂𝗈𝗇𝗌(h)$, so that it is added to the NSM Value Balance.

Anyone MAY send ZEC to the NSM donation address, and nothing sent there can be returned. Wallets SHOULD NOT offer it as an ordinary payment destination. Counts of circulating supply SHOULD exclude everything sent to it, before $A$ as well as after.

#The donation

The ZCG Committee SHALL cause 50,000 ZEC of the funds it administers to be sent to the NSM donation address, in one or more Mainnet transactions. It SHALL do so as soon as possible, and no later than 30 days after the date on which this ZIP is accepted by the Zcash community.

Since the funds ZCG administers are held by FPF, the ZCG Committee fulfills this obligation by directing FPF to create the transactions, as it directs FPF to make grant payments under ZIP 1015. Only FPF's payments count toward the donation.

The ZCG Committee SHALL publish the transaction identifier of each such transaction to the Zcash community promptly after it is mined.

#Changes to ZIPs 1015 and 1016

In ZIP 1015's section on ZCG ¹⁶, add: "ZCG funds MAY also be used for the donation to the Network Sustainability Mechanism that [this ZIP] specifies. That donation is not a grant."

In ZIP 1016's section on ZCG ¹⁷, end ZCG's funding stream at this ZIP's activation height, and state that from then until the third halving the same 8% goes into the Future Dev and Legal Defense Fund Lockbox, as this ZIP specifies. In its section on the Coinholder-Controlled Fund, give the 12% stream's duration by FS_CCF_H3's own start and end heights in ZIP 214, which this ZIP leaves unchanged.

#Rationale

A lockbox of its own. The 8% is set aside, issued but locked, for future development and legal defense, and a future ZIP decides how it is spent. A separate balance keeps it apart from the Deferred Dev Fund Lockbox's purpose and disbursement rules, and like that lockbox it needs no custodians or keys.

A donation by address. NU7 deploys ZIP 237's NSM but no way for a transaction to remove ZEC from circulation directly: it deploys neither ZIP 233 nor ZIP 234 ^{18 11}. Sending to an address that no one can spend from lets the donation happen now; at $A$, it moves into the NSM, with every earlier payment to the address. The consensus change is small: no new transaction fields, address formats, or wallet changes. Payments from anyone count, so the address serves every donor. If ZIP 233 is deployed later, both mechanisms add to the same NSM Value Balance.

The donation's size. 50,000 ZEC is about 55% of ZCG's ZEC. Anyone can check its payment on the chain, and ZCG keeps the rest of its treasury and its grants program.

Accounting. The lockbox's balance stays in the Issued Supply. A donation moves value from the transparent pool to the NSM Value Balance in the same block. Both keep ZIP 237's invariant: in each block from NU7 on, the Issued Supply plus the NSM Value Balance grows by exactly the scheduled block subsidy.

Other proposals. ZIP draft #1414 sends the 8% stream to the NSM ¹⁹, and draft #1423 winds ZCG down ²⁰. Where they overlap with this ZIP, they are alternatives to it.

#Deployment

The lockbox and the NSM donation address are consensus changes, proposed for a network upgrade after NU7 that activates before height $E$; that upgrade's deployment ZIP sets $A$ for each network ²¹. The donation needs no network upgrade: it is due within 30 days of this ZIP's acceptance.

#Reference implementation

None yet.

#References