Zcash [ZEC] is preparing a major network upgrade that will reduce block time. The network upgrade (NU7) is designed to shorten the time it takes for blocks to be processed.

Set to be implemented on the 6th of November, this new system will enable Zcash to decrease block processing times by approximately 67%, from 75 seconds to 25 seconds.

Simply, the direct result of this change will likely be the ability for users to finalize transactions significantly faster than before. In addition, it will enable the network to process more total activity, all without altering the amount of ZEC that is added to circulation each day.

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Source: X

Notably, there are two other aspects of the upgrade in need of attention. First, the Sprout pool will no longer exist. Second, 60% of every transaction fee collected by the network will now go into a deferred reserve.

However, how successful these upgrades are in creating the desired effect will depend on whether the faster confirmation rates create increased adoption on-chain.

Zcash funding proposal withdrawn

Although NU7 improves the way Zcash’s network operates, the Zcash funding model faces a separate challenge.

Who gets to control the future funding for development was a subject of debate for weeks prior to the 3rd of November. This was when Zcash Community Grants announced that it had withdrawn its proposal to direct about 98,000 ZEC into future miner rewards.

Notably, that amount represented about half of its entire treasury.

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Source: Zcash Community

The proposal would have drawn 36,200 ZEC from ZCG’s 91,500-ZEC treasury, with the remainder coming from reduced future allocations through 2028. However, its withdrawal leaves the original funding structure intact.

As such, ZCG will continue receiving 8% of newly issued ZEC, equivalent to roughly 144 ZEC daily. Miners retain 80%, while 12% enters the coinholder-controlled lockbox.

Although withdrawing the proposal leaves current distributions intact, alternative proposals continue to leave long-term funding for development uncertain.

Institutional demand adds another challenge

Beyond governance uncertainty, Zcash’s institutional demand also shows signs of weakening, although recent flows suggest a possible shift. ZEC spot ETFs recorded three consecutive days of withdrawals, with weekly net outflows reaching $7.21 million.

However, the 4th of November saw a $3.43 million inflow into ZEC spot ETFs, ending the streak of net outflows. The inflow increased total cumulative net inflows to $217.73 million and net assets to $756.83 million. Volume also hit $59.45 million.

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Source: SoSoValue

While there was an increase in net inflows recently, recent outflows indicate that institutions become more cautious. Additionally, while ETFs still hold 3.43% of outstanding circulation of ZEC, institutions do maintain a significant presence in spite of decreased demand.

Final Summary

• Zcash is preparing to cut block times from 75 to 25 seconds, improving transaction speed and network capacity.

• ZEC faces funding uncertainty and ETF outflows despite renewed institutional inflows.