Zcash's NU7 Upgrade Goes Live, Recycling 60% of Fees to Fund Future Block Rewards
Zcash's NU7 network upgrade went live early Friday at block 3,543,405, activating the Network Sustainability Mechanism that removes 60% of transaction fees from circulation.
The Network Sustainability Mechanism (NSM) addresses a challenge Zcash inherited from Bitcoin: whether transaction fees alone will suffice to pay miners as block rewards shrink. Under this new system, 60% of transaction fees will be removed from circulation and gradually reissued through future block rewards, starting in 2031, while preserving Zcash's 21 million coin supply cap.
NU7 has successfully activated on mainnet. A new era of Zcash is here.
Technical Changes
The NU7 upgrade implements several technical modifications beyond the NSM. It reduces Zcash's target time between blocks from 75 seconds to 25 seconds, which increases the risk of orphan blocks—valid blocks discarded because another miner's block reached the network first. During stress testing, developers measured an orphan rate of 3.43% at 25-second blocks compared to 1.57% at 75 seconds, though they expect the live network's rate to remain under 1% due to more concentrated mining.
The upgrade also retires Sprout, Zcash's original privacy pool from 2016, leaving approximately $16 million worth of coins locked in the pool. Additionally, it limits how much private transaction activity can fit into each block, reducing the data wallets must scan to find their payments.
Community Debate
The upgrade arrives amid a community debate about Zcash Community Grants (ZCG) and its share of the Dev Fund—the portion of block rewards funding development. Five coordinating organizations have set an expedited timeline for proposals and polling, noting tensions were high and a drawn-out debate risked deepening community divisions.
Proposals are due by November 8, with polls for coinholders and community panels running from November 16 to November 30. If consensus emerges, the groups will support a further network upgrade, NU7.1, to implement the changes. A separate proposal would require ZCG to contribute 50,000 ZEC from its treasury to the NSM.
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