Zcash, the privacy-focused cryptocurrency, has unveiled a new proposal for a dynamic fee system designed to prevent soaring transaction costs from pricing users out of the network.
The proposal, issued by research group Shielded Labs, addresses growing concerns over rising fees as Zcash experiences increased usage and network congestion.
Zcash moving beyond fixed fees
Since its launch in 2016, Zcash has relied on a fixed transaction fee structure, initially set at 10,000 zatoshi and later reduced to 1,000 zatoshi to accommodate a growing user base.
This simplicity made Zcash attractive for new users, allowing transactions to remain inexpensive and straightforward.
However, the same low fees contributed to vulnerabilities, including spam attacks known as “sandblasting,” which filled the network with batches of shielded notes, overwhelmed wallets, and clogged node storage.
To address these challenges, the network adopted ZIP-317, a protocol consolidating transaction components into standardised “actions,” creating predictable accounting units and mitigating earlier congestion issues.
Yet as network activity surged, cracks in the system became evident, and some users reported feeling the impact of high fees on large transactions, such as shielding hundreds of thousands of tiny UTXOs at costs exceeding 13 ZEC.
A median-based model with a priority lane
The new proposal introduces a stateless, dynamic fee model centred on the median fee of the last 50 blocks.
Fees will be rounded into powers of ten, simplifying the structure while reflecting network conditions.
For instance, if the median fee per action lands at 32,000 zatoshi, the system rounds it down to 10,000, whereas a median of 78,000 zatoshi would be rounded up to 100,000.
This approach aims to maintain predictable costs for everyday transactions while responding to shifts in network demand.
During periods of high congestion, the plan also introduces a temporary priority lane, allowing users to pay ten times the standard fee to secure faster processing.
This mechanism is intended to prevent bottlenecks, ensuring that critical transactions are not priced out when demand peaks.
Developers emphasise that the system will be rolled out in phases, allowing governance and client teams to validate performance before broader adoption.
Predictability without complexity
Zcash developers envision this dynamic fee adjustment as a streamlined consensus update rather than a complex redesign similar to Ethereum’s EIP-1559.
The goal is to preserve the network’s security and privacy guarantees while improving fee predictability for both traders and validators.
By responding to market conditions, the new structure could reduce sudden spikes and help sustain the blockchain’s reputation for affordability.
Notably, the proposal arrives amid heightened scrutiny of privacy-oriented technologies in the United States.
The SEC’s Crypto Task Force has scheduled a roundtable on financial surveillance and anti-money laundering compliance, drawing participation from zero-knowledge proof developers, protocol executives, and civil liberties advocates.
Following the announcement of the proposal, the price of Zcash’s native token, ZEC, surged to $423.28 before slightly pulling back to around $419.50 at press time.
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