A prominent developer of Zcash has released the first comprehensive plan for a dynamic fee market, initiating a community discussion on how the long-established network should set transaction prices amid rising ZEC values, user engagement, and institutional interest.
The proposal published on Monday by Shielded Labs outlines a transition from Zcash’s traditionally fixed fee structure—initially set at 10,000 ‘zatoshi’ and later reduced to 1,000—which functioned effectively during low demand but ultimately led to “sandblasting” spam incidents that obstructed wallets and congested the network.
An earlier ZIP-317 proposal’s implementation of action-based accounting addressed this abuse but maintained predictable, low fees that did not adjust according to usage.
Action-based accounting classified every Zcash transaction element—like spends, outputs, JoinSplits, and Orchard actions—as a single uniform “action,” allowing fees to scale with activity instead of size.
Developers indicate that with ZEC’s recent resurgence, increased retail onboarding, and the rise of Zcash digital-asset treasuries, the current model is becoming less sustainable.
It has been reported by some users that transaction costs in ZEC are on the rise, with edge cases—such as large groups of small user transactions costing multiple ZEC to shield—illustrating how fee rigidity fails when token prices increase.
The proposed mechanism suggests a straightforward, stateless dynamic fee structure based on “comparables,” or the median fee per action observed over the last 50 blocks, augmented by synthetic transactions to simulate constant congestion.
The median is established as the standard fee, categorized in powers of ten to minimize linkability and protect user privacy. Under high demand, a temporary priority lane can be activated at 10× the standard fee, providing users an opportunity to compete for block space without needing to redesign the protocol.
This system is intended to be implemented in stages. Initially, it will be off-chain for monitoring, then serve as wallet policy, and finally—if approved—as a straightforward consensus change with expiry-height limits and power-of-ten fee rules.
This approach avoids the complexity and fork risks associated with EIP-1559-style mechanisms while preserving Zcash’s privacy principles.
Other suggestions include utilizing mining difficulty as a long-term gauge for USD-denominated fees to adjust prices based on mempool activity.
ZEC was trading around $395 on Tuesday, having risen more than 12% in 24 hours as traders processed the first solid roadmap for fee reform since ZIP-317.
