Zcash’s NU7 network upgrade has been activated on mainnet at block height 3,543,405, a development that reduces target block times from 75 seconds to 25 seconds and introduces the Network Sustainability Mechanism (NSM).
The NSM, developed by Shielded Labs, is designed to address a long-standing challenge for proof-of-work networks: ensuring adequate network security as block subsidies decline. Under the NSM, 60% of Zcash transaction fees will be removed from circulation and gradually reissued through future block rewards, preserving the network’s 21 million ZEC supply cap. The reissuance of these recycled funds is scheduled to commence at block 8,939,664, an event anticipated in 2031. These funds will be distributed along a smooth curve that complements the network’s existing halving schedule.
Jason McGee, Executive Director of Shielded Labs, highlighted the significance of the NSM’s deployment, noting it was their first major mainnet project, building on an earlier concept by Nate Wilcox. The NSM aims to provide ongoing support for network security as the original block subsidy diminishes over time.
The NU7 upgrade also includes the disabling of version 4 transactions. This change renders approximately 12,224 ZEC, currently held in the Sprout privacy pool, unspendable under the new rules. A separate proposal is reportedly under consideration that could involve Zcash Community Grants (ZCG) contributing 50,000 ZEC from its treasury to the NSM, potentially offering additional support for future block rewards.
In terms of market performance, ZEC has seen substantial gains year-to-date in 2026, increasing by over 150%. The asset’s price rose from the $500s to a multi-year high of $1,693 in September, positioning it among the top 10 cryptocurrencies by market capitalization. Following the NU7 upgrade, ZEC experienced a brief price drop to around $1,222 before recovering to $1,322. It is currently trading near $1,290.
This upgrade is significant as it addresses the long-term sustainability of Zcash’s network security by adjusting block times and introducing a mechanism to supplement block subsidies with transaction fees. However, uncertainties remain regarding the sufficiency of transaction fees for future security and the finalization of the proposed ZCG contribution. The exact pace of new ZEC entering circulation following the block reward adjustments is also a factor to be observed.
Broader Context
Source materials place the factual news in this context: Zcash has activated its major network upgrade, NU7, on mainnet at block height 3,543,405 on November 5.
