Zcash activated its NU7 network upgrade at block 3,543,405 early Friday, implementing a new economic model designed to sustain miner incentives after the initial coin issuance period ends.
The upgrade introduced the Network Sustainability Mechanism (NSM), which removes 60% of transaction fees from circulation and reissues them through future block rewards starting in 2031. This structure aims to preserve Zcash’s hard cap of 21 million coins while ensuring continued security funding as block subsidies decline.
Faster Blocks and Legacy Retirement
Beyond economic changes, NU7 reduces the target time between blocks from 75 seconds to 25 seconds. The Zcash Foundation stated that this adjustment is intended to improve transaction throughput and user experience. To support the faster block time, the upgrade also limits the amount of private transaction activity that can fit into each block, reducing the data volume wallets must scan to identify payments.
The upgrade retires Sprout, Zcash’s original privacy pool launched in 2016. According to the Zcash Foundation, this move leaves approximately $16 million worth of coins locked in the deprecated pool, effectively removing them from active circulation.
Stress Test Results
Developers at Zakura conducted stress tests to evaluate the network’s performance under the new 25-second block interval. In a test involving 80 nodes across 11 regions with blocks filled with private transactions, they measured an orphan rate of 3.43%. This compared to a 1.57% orphan rate observed at the previous 75-second interval.
Governance and Future Funding
Jason McGee noted that the NSM builds on a concept previously proposed by developer Nate Wilcox, known as the Zcash Posterity Fund. A separate proposal currently under consideration would require Zcash Community Grants to contribute 50,000 ZEC from its treasury to the NSM.
Concurrently, five organizations coordinating Zcash’s coinholder voting—Project Tachyon, Shielded Labs, Valar Group, the Zcash Foundation, and ZODL—have established an expedited timeline for the ongoing Dev Fund debate. Proposals are due by November 8, with polls for coinholders and community panels scheduled to run from November 16 to November 30.
