Zcash activated its NU7 network upgrade at block 3,543,405 early on November 6, 2026, introducing a mechanism that recycles transaction fees into future mining rewards. The upgrade also shortened the target block interval and retired Sprout, the network’s original privacy pool.
The activation was reported by Decrypt on November 6, 2026, at 18:13:27 UTC+8. Zcash’s official account confirmed that NU7 had activated on mainnet.
How fee recycling works
The new Network Sustainability Mechanism (NSM) addresses a long-term security question Zcash inherited from Bitcoin: as block subsidies fall with successive halvings, will transaction fees alone provide enough compensation for miners to secure the network?
Under the NSM, 60% of transaction fees are removed from circulation and gradually reissued through future block rewards. Reissuance is scheduled to begin in 2031, with the recycled funds distributed along a smooth curve on top of the existing halving schedule. The mechanism preserves Zcash’s 21 million ZEC supply cap.
Shielded Labs developed the mechanism as its first project. According to the organization’s Jason McGee, it builds on an idea developer Nate Wilcox proposed years earlier under the name 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 activated part of NU7.
Faster blocks, with an orphan-rate trade-off
NU7 cuts Zcash’s target time between blocks from 75 seconds to 25 seconds, according to the Zcash Foundation.
Shorter intervals increase the risk of orphan blocks: valid blocks discarded because a competing miner’s block reached the rest of the network first. In a stress test involving 80 nodes across 11 regions, with every block full of 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 orphan rate to remain below 1%, because actual mining is much more concentrated and blocks are much emptier. That figure was an expectation, not a reported live-network measurement. The same developers had proposed a quantum privacy fix for shielded swaps the previous month.
According to the upgrade specification, NU7 also limits the amount of private transaction activity that can fit in each block, reducing the data wallets must scan to identify their payments.
Sprout retirement and the issuance compromise
The upgrade retires Sprout, Zcash’s original privacy pool introduced in 2016, leaving coins worth about $16 million locked in the pool.
The activated NSM differs from Shielded Labs’ original design, which would have replaced halvings with a smooth issuance curve. Community panels supported that approach, but coinholders did not. An alternative retaining the halvings was developed instead.
“We still think the original design was simpler and better, but we respect the process that led us here,” McGee wrote. He argued that protocol changes should be difficult and that the process should resist capture by any single organization, group or influential individual.
A separate development-funding decision remains open
At the time of the report, the community was also debating the future of Zcash Community Grants (ZCG) and its share of the Dev Fund, the portion of block rewards allocated to development.
The five organizations coordinating 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.”
Proposals were due by November 8, 2026, with coinholder and community-panel polls scheduled for November 16–30. If rough consensus emerged, the organizations said they would support a further network upgrade, NU 7.1, to implement the outcome. That upgrade remained conditional, rather than part of the completed NU7 activation.