Zcash rolls out new fee plan to protect traders from high costs

A Zcash developer has released a blueprint for a dynamic fee market on the network, which could reduce the blockchain’s pricing for ZEC transactions. 

The plan unveiled on Monday by research group Shielded Labs includes a multi-phase approach to replace the static pricing method affecting Zcash since its launch nearly ten years ago.

Zcash has been lauded for its simplicity and accessibility, but according to the developers from Shielded Labs, those same characteristics have left the chain vulnerable to spam attacks and congestion as more users join the blockchain for privacy.

Developers propose walking away from Zcash fixed fees

When Zcash launched in October 2016, the network was imposing a fixed fee of 10,000 zatoshi for transactions. The number later fell to 1,000 when devs reworked its contracts so transactions would become more affordable as more users flocked in. The figure was small enough to make ZEC transactions “cheap,” a trait many deemed was part of the network’s ethos.

“I personally share my Z-addr from time to time on Twitter, and I get flooded with messages from the community. It’s really a special experience. I’ve also onboarded 100+ people in this way through a simple message and a few cents in Zcash,” said one Zcash forum member.

However, the low fees also opened the door to “sandblasting,” a spam attack that filled the chain with batches of shielded notes, which later overwhelmed wallets and clogged node storage, leaving some users with unresponsive or “bricked” software. 

Zcash developers introduced ZIP-317 to solve the data overreach, which consolidated several transaction components into unified “actions” and a predictable accounting unit. ZIP-317 was enough to nerf the sandblasting era and is still the fee mechanism used on mainnet today. Yet, Shielded Labs admits cracks have re-emerged because the network activity has picked up.

Zcash users complain about transactions being ‘too expensive’

In their proposal, the researchers mentioned there is no definitive data on users refusing to transact due to costs, but community sentiment insinuates the water is boiling. X user going by the tag BostonZcash said they were feeling “a sense of urgency” because of high fees, and a recent poll on X showed more than 20% Zcash traders reporting current prices were too high. 

One edge case on the platform’s developer forum saw a user holding 270,000 tiny transparent UTXOs unable to shield them without paying a fee of 13.5 ZEC, a cost far too large for many users to justify.

“That transaction fee for combining that many notes will be 13.5 zec according to zip317, and the current base action fee is 0.00005 x 270k. Also, I highly doubt a tx with that many notes will fit in a single block,” a member replied to the trader.

The new proposal from Shielded Labs showcased a stateless, dynamic fee model built around “comparables,” or the median fee per action on the previous 50 blocks. The median becomes the network’s standard fee, and the value is bucketed into powers of ten. 

If the median fee per action comes in at 32,000 zatoshi, the system would round down to 10,000. If it lands at 78,000 zatoshi, it rounds up to 100,000. When the market is in periods of stress, likely from high transaction requests, the mechanism opens a temporary priority lane priced at 10 times the standard fee. 

Privacy coins and blockchain networks on the SEC’s watch

The fee debate arrives during a sensitive moment for privacy technologies in the United States. According to the government department’s website, the Securities and Exchange Commission’s Crypto Task Force has scheduled a four-hour roundtable on financial surveillance and privacy for December 15. 

Zero-knowledge proof developers, protocol executives, and civil liberties advocates will all be at the meeting to talk about whether blockchain techniques that protect privacy can work with anti-money laundering laws.

Two months ago, prosecutors secured five- and four-year prison sentences for the co-founders of Samourai Wallet, accusing them of running an unlicensed money-transmitting business tied to $237 million in illegal transactions.

Three months before that, a jury convicted Tornado Cash developer Roman Storm on unlicensed money-transmitting charges, though jurors deadlocked on the money laundering count and acquitted him of sanctions violations.

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