A prominent Zcash developer has released the first detailed blueprint for a dynamic fee market, sparking community discussion about how the decade-old network should price transactions as ZEC’s price, user activity and institutional interest climb.
The proposal released by Shielded Labs on Monday proposes a shift from Zcash’s historically static fee model — initially 10,000 “zatoshi” and later slashed to 1,000 — that worked when demand was low but ultimately led to “sandblast” spam incidents that clogged wallets and clogged the chain.
The earlier ZIP-317 proposal’s move to action-based accounting addressed abuse concerns but retained predictably low fees that did not adjust based on usage.
Action-based accounting treats each Zcash transaction component (e.g. spends, outputs, JoinSplits, Orchard actions) as a unified “action”, allowing fees to vary with activity rather than byte size.
Developers say that with ZEC’s recent resurgence, the addition of new retail, and the emergence of Zcash digital asset treasuries, the status quo is becoming increasingly untenable.
It said that some users have started reporting rising transaction costs in ZEC, and edge cases, such as large numbers of tiny user transactions that cost double digits of ZEC to secure, illustrate how fee rigidity is broken when token prices rise.
The proposed mechanism introduces a simple, stateless dynamic fee design built around “comparable”, i.e., the median fee per operation observed over the previous 50 blocks, and filled with synthetic transactions to simulate always-on congestion.
The median becomes the standard fee, in powers of ten, to reduce linkability and avoid revealing user information. Under pressure, temporary priority lanes opened at 10x standard fees, giving users a way to compete for block space without redesigning the protocol.
The system is designed to be rolled out in phases. First as off-chain monitoring, then as wallet policies, and finally – if approved – as a simple consensus change with expiry height limits and power-of-ten fee rules.
This avoids the complexity and fork risk of EIP-1559-style mechanisms while keeping Zcash’s privacy restrictions intact.
Other proposed ideas include using mining difficulty as a long-term heuristic for USD-denominated fees to adjust prices based on mempool pressure.
ZEC was trading around $395 on Tuesday, up more than 12% in 24 hours, as traders digested the first concrete roadmap for fee reform since ZIP-317.