- A developer for ZCash proposed a new dynamic fee market to replace the current fixed fee system.
- The plan addresses rising transaction costs and network congestion caused by increased user activity and a higher token price.
- The model uses the median fee from recent blocks to set fees, adjusting in real time without compromising privacy.
- The rollout is phased, starting with off-chain monitoring before moving to wallet policies and potential consensus changes.
- The new fee system avoids complex protocol forks and preserves the network’s privacy standards.
A key developer from Zcash introduced a detailed proposal on Monday for implementing a dynamic fee market, aiming to replace the network’s longstanding static fee system as user demand and ZEC’s price rise. The proposal, detailed by Shielded Labs at fees.shieldedinfra.net, seeks to improve transaction pricing on the decade-old blockchain.
Historically, Zcash set transaction fees at fixed levels—initially 10,000 zatoshi (the smallest unit of ZEC), later lowered to 1,000. This simple model helped during times of low demand but led to “sandblasting” spam attacks that congested wallets and clogged the network. An earlier update, ZIP-317, introduced action-based accounting, charging fees per transaction component rather than byte size, which helped stop abuse but maintained low, predictable fees that don’t adapt to network use.
The new proposal’s dynamic fee system establishes fees based on “comparables,” specifically the median fee per action over the past 50 blocks. To maintain privacy, fees are rounded to powers of ten, limiting information leakage about user transactions. Under high demand, it introduces an optional priority lane, allowing users to pay up to 10 times the standard fee to gain faster block inclusion, all without needing protocol redesign.
The rollout plan for this fee mechanism involves multiple stages: initial off-chain monitoring, integration into wallet policies, and if approved, a simple consensus rule update with expiration limits and power-of-ten fee structures. This approach avoids the risks linked with complex, Ethereum-style fee reforms like EIP-1559, while upholding Zcash’s strong privacy guarantees.
Additional suggestions include factoring in mining difficulty to adjust fees in dollar terms, helping align prices with network congestion. Following the announcement, ZEC’s price rose over 12% in 24 hours, trading near $395 on Tuesday, reflecting market interest in the proposed fee reform.
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