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Zcash’s NU7 Upgrade Goes Live, Recycling 60% of Fees to Fund Future Block Rewards
Zcash’s NU7 upgrade went live at block 3,543,405, introducing a mechanism to recycle some transaction fees into future block rewards. It is intended to help fund the network’s security as regular block subsidies decline, while keeping Zcash’s 21 million ZEC supply cap.
The mechanism will remove 60% of transaction fees from circulation and gradually reissue them through block rewards from 2031, alongside the existing halving schedule. NU7 also shortens target block times from 75 seconds to 25, retires the original Sprout privacy pool, and limits private transaction activity per block. A separate proposal would allocate 50,000 ZEC from the Community Grants treasury to the mechanism; proposals on the grants programme are due by November 8, with coinholder and community polls scheduled for November 16 to 30.
In short
- NU7 is live, recycling 60% of fees into future rewards from 2031.
- Zcash keeps its 21 million ZEC supply cap and existing halving schedule.
- The upgrade also cuts target block times to 25 seconds.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Recycling 60% of transaction fees could help sustain block rewards and network security as regular subsidies decline, while retaining the 21 million ZEC supply cap. Supporters may also see the change as a measured way to fund future rewards from fees already paid by users, rather than relying solely on new issuance or a separate treasury allocation.
The case against
Critics may argue that taking most transaction fees out of circulation changes the economic meaning of fees and could make the reward system harder for users and investors to assess. They may also question whether the mechanism will provide enough reliable security funding, and whether limiting private activity per block and retiring the Sprout pool impose privacy or capacity costs that outweigh its benefits.
Explained simply
Zcash is a cryptocurrency whose users can choose transactions that conceal details such as the sender, recipient and amount. Like Bitcoin, it has a fixed supply limit of 21 million coins, and new ZEC are issued to miners as block rewards; scheduled halvings reduce those rewards over time.
Transaction fees are paid when ZEC moves across the network. Under the new mechanism, part of those fees is taken out of circulation and later added back through block rewards, intended to support network security as the regular rewards shrink. The change is designed to work within the existing supply limit.
Zcash is maintained by developers and supported by miners, coinholders and community groups, including a grants programme that funds projects. Decisions about changes and funding can involve different proposals and community polls, so the fee mechanism and any additional treasury contribution are distinct parts of the wider process.