Historical report: November 6, 2026, at 18:13:27 UTC+8, based on Decrypt’s original publication.
Zcash’s NU7 upgrade activated at block 3,543,405 early Friday, November 6, introducing a mechanism intended to help fund network security as rewards for miners decline. Zcash’s official account confirmed the mainnet activation.
The central change is the Network Sustainability Mechanism (NSM): it removes 60% of transaction fees from circulation and gradually reissues those funds through future block rewards. The mechanism preserves Zcash’s 21 million ZEC supply cap.
How the fee-recycling mechanism works
Miners receive block rewards for securing the network. Part of those rewards comes from a block subsidy—newly issued coins—which shrinks through scheduled halvings. As with Bitcoin, that raises a long-term question for Zcash: will transaction fees alone eventually be enough to pay miners to secure the network?
The NSM is designed to help address that question by shifting some fee revenue into future rewards:
- 60% of transaction fees are removed from circulation for later reissuance.
- Reissuance begins in 2031.
- The recycled funds are distributed along a smooth curve on top of the existing halving schedule.
- The 21 million ZEC cap remains unchanged.
This is a change to the network’s miner-funding mechanism, not a promised return for people holding ZEC.
Jason McGee of Shielded Labs, the development organization behind the mechanism, described activation as a major milestone. He said the NSM was Shielded Labs’ first project and built on an earlier idea from developer Nate Wilcox called the Zcash Posterity Fund.
A separate proposal still under consideration at the time of reporting 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 part of NU7.
Faster blocks and the retirement of Sprout
According to the Zcash Foundation, NU7 also reduced the target interval between blocks from 75 seconds to 25 seconds. It retired Sprout, Zcash’s original privacy pool from 2016, leaving coins worth about $16 million locked in the pool.
Faster blocks come with a trade-off: a greater risk of orphan blocks, valid blocks discarded when a competing miner’s block reaches the rest of the network first.
Developers of Zakura tested 80 nodes across 11 regions, with every block full of private transactions. They measured orphan rates of:
- 3.43% with 25-second blocks.
- 1.57% with 75-second blocks.
The developers expected the live network’s rate to remain below 1%, because actual mining is much more concentrated and blocks are much emptier. That 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 that can fit into each block. According to the upgrade specification, this reduces the data wallets must scan to identify their payments.
Why the halving schedule stayed
Shielded Labs’ initial design would have replaced Zcash’s halvings with a smooth issuance curve. Community panels supported that approach, but coinholders did not, leading to an alternative that retained halvings.
“We still think the original design was simpler and better, but we respect the process that led us here,” McGee wrote. He added that protocol changes should be difficult and that the process should resist capture by any single organization, group or influential individual.
The outcome illustrates a distinction between a developer’s preferred token design and the design that gains sufficient support to become part of the network’s rules.
The separate Dev Fund debate
At the time of publication, the community was also debating ZCG’s future and its share of the Dev Fund, the portion of block rewards used to pay for development.
The five organizations coordinating Zcash’s coinholder voting—Project Tachyon, Shielded Labs, Valar Group, the Zcash Foundation and ZODL—set an expedited schedule. They said “tensions were high” and warned that a prolonged debate risked “deepening divisions within the Zcash community.”
The announced timetable was:
- November 8, 2026: proposals due.
- November 16–30, 2026: polls for coinholders and community panels.
- Conditional next step: if rough consensus emerged, the coordinating groups would support a further network upgrade, NU 7.1, to implement it.
These were proposed next steps in the November 6 report, not confirmed outcomes.
Original source: Decrypt — Zcash’s NU7 Upgrade Goes Live, Recycling 60% of Fees to Fund Future Block Rewards, published November 6, 2026, at 18:13:27 UTC+8.