Zcash's NU7 update enhances transaction speed and alters fee distribution, while rendering funds in the Sprout pool inaccessible.
On November 6, the Zcash network implemented the NU7 update, which aims to enhance transaction speed by reducing the target block interval from 75 to 25 seconds. This update, activated at block height #3,543,405, also modifies fee distribution and disables transfers from the outdated Sprout pool.
The shorter block interval is expected to decrease the wait time for deposit confirmations. For example, a three-confirmation requirement from exchanges would reduce the estimated deposit time from 225 seconds to just 75 seconds.
Additionally, NU7 imposes limits on the number of private transactions per block. Given Zcash's privacy features, where recipients of transactions are not visible, wallets must verify transaction data to identify incoming payments. If malicious actors flood the network with spam transactions, the effort required for wallets increases, leading to higher traffic usage and longer synchronization times.
New parameters introduced in ZIP-218 aim to reduce the maximum data volume for lightweight wallets to synchronize during such attacks by 37%, dropping from 271 MB to 169 MB daily. Importantly, the estimated throughput for simple private payments using the Orchard protocol increases from 2.9 to 6.6 transactions per second.
Fees and the Fate of Sprout
The update also cuts the share of transaction fees for miners to 40%, with the remaining 60% temporarily removed from circulation as part of the Network Sustainability Mechanism, which will gradually return these funds through additional block rewards starting around February 2031.
To balance the more frequent block releases, the base block reward has been reduced by a third, while maintaining the daily issuance rate and the existing four-year halving schedule, along with a total supply cap of 21 million ZEC.
Furthermore, transactions using the outdated v4 format are now prohibited, which was the only format that allowed withdrawals from Sprout, Zcash's initial privacy system. Consequently, approximately 12,224 ZEC in Sprout remains inaccessible.
Developer Sean Bowe emphasized the need to eliminate Sprout, calling it a "pure technical debt that creates unnecessary security risks for the project." While he suggested future updates could introduce a mechanism to recover funds, NU7 does not include such a solution. According to ZIP-2003, the coins in Sprout will not be burned, but their recoverability remains uncertain.
