Zcash has proposed a dynamic fee plan intended to prevent users from being priced out as network demand and ZEC value increase. The proposal, advanced by Shielded Labs and building on ZIP-317, replaces static per-transaction charges with a market-responsive mechanism tied to recent block activity. The approach seeks to align costs with on-chain conditions while maintaining privacy safeguards inherent to shielded operations.
Technical design of the Zcash dynamic fee plan
The plan determines fees using the median fee per action observed across the prior 50 blocks, shifting price discovery to on-chain comparables rather than a fixed nominal amount. Fees are discretized by powers of 10 to reduce linkability between transactions and preserve privacy, and a staged rollout is planned to limit operational risk during the transition.
A temporary priority lane is triggered under congestion, imposing up to a 10x multiplier for expedited inclusion, described as a pragmatic measure to ensure essential activity proceeds when demand spikes. The design intentionally avoids complex auction mechanisms, favoring a simpler median-based model to balance predictability, privacy and resilience.
Background, rationale and market response
Zcash historically used fixed fees—initially 10,000 zatoshi and later reduced to 1,000—which became increasingly burdensome as ZEC’s market value and network use grew. Fixed-fee regimes can exacerbate denial-of-service patterns known as sandblasting attacks, which flood a network with many low-cost transactions to degrade service for legitimate users. The dynamic model aims to mitigate that operational vector by aligning cost with contemporary demand and by adding a controlled priority path during peaks.
The proposal was announced on December 9, 2025; market participants reacted swiftly, with reported ZEC price movement of roughly 12%–18% within 24 hours and trading values cited near $395–$408 in the immediate window. That market response indicates investor recognition of the protocol-level attempt to protect user access and network utility. Implications for operators, custodians and compliance functions include revised fee estimation logic, updated fee reporting, and enhanced monitoring to detect unintended privacy or congestion effects during rollout, with service providers accommodating discretized fee tiers and the conditional activation of the priority lane in their transaction selection policies.
The dynamic fee plan reframes Zcash’s approach to transaction costs by tying fees to short-term on-chain medians while preserving privacy through fee discretization and a limited priority mechanism. The next verified milestone will be the phased implementation and live monitoring of the rollout announced on December 9, 2025, with attention focused on congestion behaviour, privacy metrics and operational resilience for custodians and platform operators.