Historical report: Decrypt published the original article on November 6, 2026, at 18:13:27 UTC+8. The developments and scheduled dates below reflect that reporting.
Zcash activated its NU7 network upgrade at block 3,543,405 on November 6, 2026, introducing a mechanism that redirects transaction fees toward future mining rewards. Zcash’s official account confirmed the mainnet activation.
The key tokenomics distinction is between recycling existing ZEC and expanding its supply ceiling: the Network Sustainability Mechanism (NSM) removes 60% of transaction fees from circulation for gradual reissuance, while retaining the 21 million ZEC cap and the existing halving schedule.
How fee recycling changes future rewards
The NSM addresses a security-funding question Zcash shares with Bitcoin: as block subsidies decline through successive halvings, will transaction fees alone provide enough compensation for miners to secure the network?
Under NU7, reissuance of the recycled fees is scheduled to begin in 2031. Those funds will be distributed along a smooth curve on top of the existing halving schedule. This is a funding mechanism, not evidence that the long-term security question has been settled.
Shielded Labs developed the NSM as its first project. According to the organization’s Jason McGee, it builds on an earlier proposal from developer Nate Wilcox called the Zcash Posterity Fund.
A separate proposal under consideration would require Zcash Community Grants (ZCG) to contribute 50,000 ZEC from its treasury to the NSM. That contribution was not reported as an activated NU7 provision.
Adopted mechanism versus the original design
Shielded Labs initially proposed replacing halvings with a smooth issuance curve. Community panels supported that approach, but coinholders did not. The alternative adopted for NU7 retained halvings while adding the fee-recycling mechanism.
“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.
Network changes: faster blocks, different trade-offs
NU7 also changed network operation, separately from its token-supply mechanism.
| Measure | Previous setting | NU7 setting |
|---|---|---|
| Target interval between blocks | 75 seconds | 25 seconds |
| Orphan rate in the cited stress test | 1.57% at 75-second blocks | 3.43% at 25-second blocks |
The Zcash Foundation reported the reduction in target block time. Faster blocks increase the risk of orphan blocks—valid blocks discarded when another miner’s competing block reaches the network first.
The stress-test figures came from Zakura developers using 80 nodes across 11 regions, with every block full of private transactions. The developers expected the live network’s orphan rate to remain below 1%, citing more concentrated mining and much emptier blocks. That figure was an expectation, not a measured live-network result. The source also noted that Zakura had proposed a quantum privacy fix for shielded swaps the previous month.
According to the upgrade specification, NU7 additionally limits private transaction activity per block, reducing the data wallets must scan to identify their payments.
The upgrade also retired Sprout, Zcash’s original privacy pool introduced in 2016, leaving coins valued at approximately $16 million locked in the pool, according to the report.
Dev Fund decisions remained separate
At the time of publication, the Zcash community was also debating ZCG’s future and its share of the Dev Fund, the portion of block rewards used to fund development.
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.”
The reported schedule was:
- November 8, 2026: Proposals due.
- November 16–30, 2026: Coinholder and community-panel polls.
- Conditional next step: If rough consensus emerged, the organizations would support NU 7.1 to implement it.
These governance proposals were distinct from NU7’s activated changes: fee recycling was live, while the proposed treasury contribution and subsequent Dev Fund changes remained unresolved in the original report.