Zcash NU7 Upgrade has been launched in a live test on Zcash’s testnet ahead of its anticipated mainnet launch in November. The upgrade launched with the activation of block 4,465,026 on October 4th and marks significant changes to Zcash’s network, including longer block times and a new system for distributing transaction fees.
This move occurs in light of increased market pressure on ZEC, where the ZCSH Spot ETF by Grayscale witnessed net outflows of $93.56 million in the week ending October 2nd.
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What Happened With the Zcash NU7 Upgrade?
The Zcash NU7 Upgrade became live on the testnet on October 4, enabling users to test the proposed changes to the protocol on the testnet.
Based on the information available from Zcash testnet block explorer ZecBlock, block 4,465,026 was mined at 18:21:45 UTC, indicating the scheduled time of activation of NU7. This was confirmed by Zcash in their post on X.
Testnet deployment offers developers a chance to see how well the network operates prior to the activation going live on mainnet. The Zcash Foundation has also said that testnet operators use the release candidate and conduct tests on NU7 in practice.
This step is significant, as the activation on the mainnet will be done depending on what developers gather from the testnet. Any technical issues might result in a change to the activation timeline.
What Does the Zcash NU7 Upgrade Change?
One of the major modifications that the Zcash NU7 upgrade will bring to the network is a decrease in the network’s target block interval.
Currently, the network is designed such that a new block should be generated every 75 seconds. With NU7, the target interval will be lowered to 25 seconds.
The reduced block interval is expected to lower the average time before transactions can be confirmed by the network. It will make Zcash payments faster for those who use them.
But faster blocks are only one aspect of the NU7 protocol update. The other aspect of the NU7 protocol update pertains to transaction fees’ participation in future rewards.
Another important aspect of the Zcash NU7 Upgrade is the Sustainability Network Mechanism, through which part of the transactions’ fees will go towards future block rewards.
This mechanism was introduced as another method of financing future block rewards while retaining the maximum supply model of Zcash.
This mechanism may prove to be quite essential for the further development of the network since transaction fees may serve as an additional part of the reward system.
Moreover, NU7 updates the list of transaction versions that can be included in the blocks. Also, another key aspect of the Zcash NU7 Upgrade is that of version 4 transactions.
When NU7 gets activated on mainnet, version 4 transactions will cease to be valid. In turn, this means that there will be consequences for the Sprout shielded pool funds, since to spend them, it is necessary to use the old type of transaction.
Therefore, it follows that users who store their ZEC in the Sprout pool will need to transfer their assets prior to the NU7 activation on mainnet; otherwise, their funds might get locked under the new network conditions.
When Could NU7 Reach Mainnet?
The developers of Zcash will probably use the testnet period to examine the upgrade and make a decision about mainnet activation.
The current schedule predicts October 20 as the date of the final decision and activation height determination. The mainnet activation is presently scheduled for November 5.
Of course, it will depend on the outcome of testing. In case there are some issues requiring further actions, the schedule may be altered.
At the moment, the testnet activation may be considered as the next step towards NU7 implementation on the Zcash mainnet.
ZEC Faces ETF Outflows During Upgrade Testing
The Upgrade of the Zcash Network (NU7) comes as ZEC is facing poor market performance. Grayscale’s ZCSH spot ETF saw net outflows worth around $93.56 million in the week that ended October 2, the first one since late August when the fund had been seeing positive flows.
This occurred even as ZEC fell after rising to above $1,650 at the end of September. The token went on to fall towards the $1,300 level amid selling pressures.
The context is important ahead of this network upgrade because Zcash is making major technical upgrades amid poor ETF inflows and a notable correction in its price.
What Comes Next for Zcash?
The next significant event in the timeline of the Zcash NU7 Upgrade would be the completion of the testnet testing and the decision made by developers on October 20.
In case the testing is completed successfully, the network would be on the path towards the intended launch date of November 5.
Before that, network performance and transactions under the new rules would have to be observed. On the other hand, ZEC price action and ZCSH ETF inflows would continue to be relevant market drivers.
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This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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