A key Zcash developer has released the first detailed plan for a dynamic fee marketplace, opening a community discussion on how the decade-old network should price transactions as ZEC’s price, user activity and institutional interest increase.
Monday’s proposal, published by Shielded Labs, calls for a change from Zcash’s historically static fee model — originally 10,000 “zatoshi” and then reduced to 1,000 — which worked in times of low demand but ultimately contributed to the “sanding” of spam episodes that clogged wallets and cluttered the channel.
Moving from an earlier ZIP-317 proposal to action-based accounting corrected the abuse vector, but kept fees predictable and low that do not adjust for usage.
Action-based accounting treated each Zcash transaction component (such as spends, exits, JoinSplits, and Orchard actions) as a single uniform “action,” allowing fees to scale based on activity rather than byte size.
Developers say that with the recent resurgence of ZEC, the onboarding of new retailers, and the emergence of Zcash digital asset treasuries, the status quo is becoming less and less tenable.
He said some users have started reporting increased transaction costs in terms of ZEC, and extreme scenarios – like large sets of small user transactions costing ZEC in the double digits to protect – show how fee stickiness breaks down when token prices rise.
The proposed mechanism introduces a simple, stateless dynamic fee design, built around “comparables,” or the median fees per share observed over the previous 50 blocks, supplemented by synthetic transactions to simulate permanent congestion.
The median becomes the standard rate, divided into powers of ten to reduce the possibility of linking and avoid leaking user information. When stressed, a temporary priority lane opens at 10 times the standard rate, giving users a way to compete for block space without rethinking the protocol.
The system is designed to be deployed in phases. First off-chain for monitoring, then as a wallet policy, and only later – if approved – as a simple consensus change with expiration height limits and power of ten fee rules.
This avoids the complexity and risk of forking of EIP-1559 type mechanisms while preserving the confidentiality constraints of Zcash.
Other ideas put forward include using mining difficulty as a long-term heuristic for USD-denominated fees to adjust prices based on memory pool pressure.
ZEC traded around $395 on Tuesday, up more than 12% in 24 hours, as traders digested the first concrete roadmap for fee reform since ZIP-317.
