Overview
- Developers of Zcash are planning to implement the NU7 upgrade on November 5, which will significantly reduce block time between confirmed transactions.
- A corresponding adjustment will decrease the mining reward per block, ensuring that the daily total of new ZEC remains constant.
- A staggering 98.9% of voting coinholders opted to maintain the existing Bitcoin-style halving schedule, with a new mechanism to bank transaction fees beginning in 2026 to support miner payments post-2031.
Zcash's development team is set to activate the NU7 upgrade on November 5, marking a significant enhancement for the network. One of the key features of this upgrade is the reduction of block time from 75 seconds to just 25 seconds.
This upgrade represents a threefold increase in transaction speed for Zcash, which is known for its zero-knowledge proofs—technology that allows the validation of transactions without disclosing the sender, recipient, or amount. The shortened block intervals will enable shielded transactions to be confirmed nearly as quickly as traditional card swipes.
Myriad: How high will Bitcoin go? Click to make your prediction.Consensus was reached among various teams involved in Zcash's development—including the Zcash Foundation, Project Tachyon, Valar Group, ZODL, and Shielded Labs—on the upgrade's design and timeline, with a deadline for the specifications set for September 30.
The increase in blocks raises a potential issue: generating three times as many blocks typically means minting three times as many new coins, unless countermeasures are implemented. The solution, known as ZIP 218, proposes a reduction in the reward per block by about one-third, keeping the overall issuance rate consistent with previous levels.
This is significant because, like Bitcoin, Zcash employs a halving mechanism that reduces the mining reward by half every few years, ultimately limiting the total number of coins that can ever be created. In a recent vote, 98.9% of the participants, representing 2.4 million ZEC, supported the continuation of this halving model.
However, halvings can eventually reduce miners' revenue. To address this, NU7 introduces a Network Sustainability Mechanism that will allocate approximately 60% of transaction fees for future distribution, starting in February 2031, based on what the development teams deemed a conservative interpretation of the coinholder vote.
Despite these changes, ZEC holders will not see substantial alterations to their everyday activities—wallets are not expected to require significant updates, and NU7 will not introduce new transaction types. The upgrade's primary goal is to ensure that Zcash can continue to incentivize miners for network security in the long term while maintaining its promise of a capped supply, which has attracted holders who are accustomed to Bitcoin's model.
The timing of this upgrade comes after a challenging period for Zcash but follows a remarkable increase in its native currency, ZEC.
In July, Zcash successfully executed the Ironwood upgrade to rectify a flaw that had persisted for four years, which could have allowed the creation of counterfeit ZEC, leading to a temporary 38% drop in the token's value.
Since then, ZEC has rebounded significantly, surging over 2,500% in the past year, aided by the Ironwood fix and the recent listing of a spot ETF by Grayscale, which allows investors to gain exposure to the asset without directly holding the coin.