Zcash’s NU7 network upgrade activated on Thursday night, switching on the Network Sustainability Mechanism (NSM), a fee-recycling system that pulls ZEC out of circulation now and reissues it through block rewards years from now. Shielded Labs’ Jason McGee had announced it in an X Article that afternoon.
McGee had written that the NSM “will activate later today as part of NU7,” and described it as Shielded Labs’ first major mainnet deployment. Block 3,543,405, the activation height set in the ZIP 259 deployment spec, was mined at 9:34 p.m. ET, according to Blockchair.
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What the NSM Changes
ZIP 259 sets reissuance to start at block 8,939,664. By Unchained’s count, that is about 5.4 million blocks after activation, which at NU7’s new block time lands in early 2031. McGee wrote that “reissuance will begin in 2031.”
Zcash’s 21 million ZEC cap and its halvings stay as they are. Under ZIP 235, the miner keeps 40% of each block’s fees and the other 60% leaves circulation; ZIP 237 then pays that ZEC back out gradually, on top of regular block rewards.
Shielded Labs’ first design “would have replaced halvings with a smooth issuance curve,” McGee wrote, but coinholders did not back it, though community panels did. A version that keeps halvings won broad support, he wrote. Coinholders voted in September for 25-second blocks and existing halvings. “We still think the original design was simpler and better, but we respect the process that led us here,” he wrote.
Faster Blocks, No More Sprout
NU7 also cuts the block target from 75 seconds to 25 seconds, with block rewards divided by three so daily issuance is unchanged, the Zcash Foundation said in its Zebra 7.0.0 release notes. It also sets per-block limits on shielded activity and drops support for version 4 transactions. Sprout transfers have no other format, so coins still in the Sprout pool can no longer be spent. About 12,224 ZEC, worth roughly $16 million, sat in the Sprout pool at the activation block, according to Blockchair’s block data. NU7 went live on Zcash’s testnet in early October.
The Zcash Foundation shipped Zebra 7.0.0 on Oct. 22 as its first stable Zebra release able to run NU7 on mainnet. “All Mainnet node operators must upgrade before NU7 activates to stay on the consensus chain,” it had warned.
The 50,000 ZEC Proposal
McGee also pointed to a separate proposal that “would require Zcash Community Grants (ZCG) to contribute 50,000 ZEC from its treasury to the NSM.” That draft ZIP, which would also end ZCG’s 8% funding stream and route it to a new development and legal-defense lockbox until the third halving, was still an open, unmerged pull request on GitHub on Thursday. McGee co-wrote it with Zooko Wilcox and Sean Bowe, and the three put it forward in late October. ZCG dropped its own funding cut earlier this week.
ZEC traded near $1,313 on Thursday evening, roughly flat over 24 hours, according to Blockchair data.
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