25% (5% of the total mining reward) for the Foundation;
40% (8% of the total mining reward) for additional major grants for large-scale long-term projects to be determined by the Foundation, with additional community input and scrutiny.
On November 18, 2020, ZIP 1014 was implemented in an upgrade of the Zcash Network called Canopy. However, the original Founders’ Reward and the Dev Fund established under ZIP 1014 expired in late 2024 and no longer govern current block reward allocations. Following the expiration of the Dev Fund established under ZIP 1014 at the Zcash Network’s second halving in November 2024, the Zcash Network implemented a revised block reward allocation structure in updates known as “NU6” and “NU6.1.” Under the current structure, 80% of newly created ZEC is allocated to miners, while the remaining 20% is allocated to development-related purposes. Of this 20%, a portion is directed to a community grants program administered by the Foundation, and the remainder is allocated to a protocol-level funding mechanism intended to support future development initiatives, with the use of such funds subject to network-level processes influenced by community and ZEC-holder inputs. Trading History The Zcash Network is a recent technological innovation, and the ZEC that are created, transferred, used and stored by entities and individuals have certain features associated with several types of assets, most notably commodities and currencies. The price of ZEC on public Digital Asset Trading Platforms (as defined herein) has a limited history, and during this history, ZEC prices on the Digital Asset Markets more generally, and on Digital Asset Trading Platforms individually, have been volatile and subject to influence by many factors, including operational interruptions. While the Index is designed to limit exposure to the interruption of individual Digital Asset Trading Platforms, the Index Price, and the price of ZEC generally, remains subject to volatility experienced by Digital Asset Trading Platforms, and such volatility could adversely affect the value of the Shares. For example, from July 1, 2021 to June 30, 2026. The Index Price has ranged from $18.14 to $685.96, with the straight average being $108.29 through June 30, 2026. In addition, during the twelve months ended June 30, 2026, the Index Price ranged from $35.01 to $685.96. See “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. Several U.S. regulators, including the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”), the SEC, the Commodity Futures Trading Commission (“CFTC”), the U.S. Internal Revenue Service (“IRS”), and state regulators, including the New York Department of Financial Services (“NYDFS”), have made official pronouncements or issued guidance or rules regarding the treatment of ZEC and other digital assets. However, the treatment of ZEC and other digital assets is often uncertain or contradictory. Additionally, some jurisdictions, such as the European Union, have passed legislation that will heavily restrict the use of privacy- preserving tokens such as ZEC. The regulatory uncertainty surrounding the treatment of ZEC creates risks for the Trust and its Shares. See “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of Digital Assets, the Trust and the Shares” in the Annual Report and the risk factors set forth in our other filings with the SEC incorporated by reference herein. ZEC Spot and Futures Markets ZEC spot markets generally allow investors to open accounts with digital asset exchanges and then buy or sell ZEC via websites or mobile applications. Prices for ZEC trades on these markets are typically publicly reported. Investors wishing to trade ZEC on a digital asset platform must deposit an accepted government-issued currency or previously acquired digital assets into their platform account before they can purchase or sell ZEC. This process of setting up an account with a trading platform and executing trades is separate from, and should not be confused with, the process of transferring ZEC between addresses on the Zcash Blockchain. The latter involves activities directly on the Zcash Network, while trading on digital platforms occurs within the exchange’s order book. The platform generally records an investor’s ZEC ownership in its internal books, not on the Zcash Blockchain. ZEC is typically not transferred to the investor’s personal wallet unless they request a withdrawal to an off-platform ZEC address.
Outside of spot markets, ZEC can also be traded over-the-counter (OTC). The OTC market is predominantly institutional, with participants including firms that provide two-sided liquidity for ZEC, investment managers,
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