Originally published by Decrypt on November 6, 2026, at 18:13:27 UTC+8. This article covers that historical report.
Zcash’s NU7 upgrade activated at block 3,543,405 early on November 6, 2026, introducing a mechanism intended to help fund network security as mining subsidies decline. The upgrade also shortened target block times and retired the network’s original privacy pool, leaving approximately $16 million worth of coins locked in that pool.
The central change is the Network Sustainability Mechanism (NSM), developed by Shielded Labs. Its purpose is to address a long-term question Zcash inherited from Bitcoin: whether transaction fees will eventually be sufficient to compensate miners as block subsidies shrink through successive halvings.
Recycling fees without raising the supply cap
Under the NSM, 60% of transaction fees will be removed from circulation and gradually reissued through future block rewards. Reissuance is scheduled to begin in 2031, following a smooth curve layered onto the existing halving schedule. The 21 million ZEC supply cap remains unchanged.
The distinction matters: the mechanism recycles fees into later mining rewards rather than increasing the maximum supply. Whether it ultimately provides sufficient funding for security remains a question; activation establishes the mechanism, not proof of its long-term adequacy.
According to Shielded Labs’ Jason McGee, the NSM was the organization’s first project and builds on an earlier proposal by developer Nate Wilcox called the Zcash Posterity Fund. A separate proposal under consideration would direct 50,000 ZEC from the Zcash Community Grants treasury into the NSM. That contribution was not described as approved.
Faster blocks bring a security trade-off
According to the Zcash Foundation, NU7 reduced the target interval between blocks from 75 seconds to 25 seconds. It also retired Sprout, Zcash’s original privacy pool, introduced in 2016.
Faster blocks increase the risk of orphan blocks: otherwise-valid blocks discarded because a competing miner’s block reaches the network first.
Developers of Zakura tested 80 nodes across 11 regions, filling every block with private transactions. They measured an orphan rate of 3.43% with 25-second blocks, compared with 1.57% at 75 seconds. The developers expected the live network’s rate to remain below 1%, citing more concentrated mining and much emptier blocks. That figure was an expectation, not a reported live-network measurement. Zakura had also proposed a quantum privacy fix for shielded swaps the previous month.
NU7 additionally limits the amount of private transaction activity allowed in each block. According to the upgrade specification, this reduces the data wallets must scan to identify their payments.
The issuance design reflects a governance compromise
Shielded Labs initially proposed replacing Zcash’s halvings with a smooth issuance curve. Community panels supported that approach, but coinholders did not. The resulting alternative retained halvings.
“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.
That history separates the mechanism’s technical objective from its governance outcome: participants agreed on a version that preserved the halving schedule, rather than adopting Shielded Labs’ preferred design.
A separate development-funding decision remained open
NU7 arrived amid debate over Zcash Community Grants (ZCG) and its share of the Dev Fund, the portion of block rewards allocated to 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 the report, proposals were due by November 8, 2026, with coinholder and community-panel polls scheduled for November 16–30. The organizations said they would support a further upgrade, NU 7.1, if rough consensus emerged.
The immediate story was therefore a change to Zcash’s security-funding rules and network operation—not evidence of increased usage or adoption. The longer-term funding outcome and the separate Dev Fund decision remained unresolved in the supplied report.
