Original reporting published November 6, 2026, at 18:13:27 UTC+08:00.
Zcash activated its NU7 network upgrade at block 3,543,405 early on November 6, 2026, introducing a mechanism that recycles 60% of transaction fees into future block rewards. The upgrade also reduced the target interval between blocks and retired the network’s original privacy pool, Sprout.
Zcash’s official account confirmed the mainnet activation. The central change, called the Network Sustainability Mechanism (NSM), is designed to help fund network security as mining subsidies decline.
How fee recycling works
The NSM addresses a long-term question Zcash shares with Bitcoin: whether transaction fees alone will adequately compensate miners as block subsidies shrink through successive halvings.
Under the new mechanism, 60% of transaction fees are removed from circulation and gradually reissued through future block rewards. Reissuance is scheduled to begin in 2031, following a smooth curve layered on top of the existing halving schedule. The 21 million ZEC supply cap remains unchanged.
Jason McGee of Shielded Labs, the development organization behind the mechanism, described activation as a major milestone. He said the NSM was the organization’s first project and built on an earlier proposal by developer Nate Wilcox, originally called the Zcash Posterity Fund.
A separate proposal under consideration would require Zcash Community Grants to contribute 50,000 ZEC from its treasury to the NSM. That contribution was not presented as an approved part of the activation.
Shielded Labs initially proposed replacing halvings with a smooth issuance curve. Community panels supported that approach, but coinholders did not, prompting an alternative that retained halvings.
“We still think the original design was simpler and better, but we respect the process that led us here,” McGee wrote. He added that protocol changes should be difficult and resistant to capture by any single organization, group or influential individual.
Faster blocks bring a security trade-off
According to the Zcash Foundation, NU7 cut the target block interval from 75 seconds to 25 seconds. It also retired Sprout, Zcash’s original privacy pool introduced in 2016, leaving coins worth about $16 million locked in the pool.
Shorter block intervals increase the risk of orphan blocks—valid blocks discarded because a competing miner’s block reached the network first.
In a stress test involving 80 nodes across 11 regions, with every block filled with private transactions, Zakura developers measured an orphan rate of 3.43% at 25-second intervals, compared with 1.57% at 75 seconds. The developers expected the live network’s rate to remain below 1%, citing more concentrated mining and less-full blocks. That figure was an expectation, not a reported live-network result.
NU7 also limits the amount of private transaction activity in each block, reducing the data wallets need to scan to identify payments, according to the upgrade specification.
Development funding remains under debate
The activation came amid debate over the future of Zcash Community Grants and its share of the Dev Fund, which directs a portion of block rewards toward development.
The five organizations coordinating Zcash’s coinholder voting—Project Tachyon, Shielded Labs, Valar Group, the Zcash Foundation and ZODL—set an expedited proposal and polling schedule. They said “tensions were high” and warned that a prolonged debate risked “deepening divisions within the Zcash community.”
At the time of publication, proposals were due by November 8, 2026, with coinholder and community-panel polls scheduled for November 16–30. The groups said they would support a further upgrade, NU 7.1, if rough consensus emerged.