Two weeks to go: Zcash NU7 upgrade imminent, 22,000 ZEC face soft freeze

Original | Odaily (@OdailyChina)

Author | Golem (@web3_golem)

Zcash is about to undergo the NU7 network upgrade, which also means approximately $30 million worth of ZEC will be "soft-frozen."

On October 20, Zcash core developer Sean Bowe submitted a proposal to set the NU7 mainnet activation height at block 3,543,405, expected to correspond to around November 5. After the upgrade, Zcash's block interval will be reduced from 75 seconds to 25 seconds, and the mining reward per block will be cut to one-third accordingly, so the daily issuance remains unchanged, and the 21 million cap and halving schedule are unaffected. In addition, the upgrade will activate a network sustainability mechanism: 60% of each block's transaction fees will temporarily exit circulation and enter a reserve, with miners receiving the remaining 40%; the reserve assets are planned to be gradually redistributed through future miner rewards starting from around February 2031 (mainnet block 8,939,664).

These adjustments have limited impact on most users' daily usage. What has truly sparked controversy is ZIP 2003—under this proposal, the 22,309 ZEC in the Sprout privacy pool will no longer be spendable after the upgrade.

Why would a network upgrade lock up old assets?

Proposal ZIP 2003 is not a cleanup operation specifically targeting Sprout. The core content of ZIP 2003 is to ban all v4-format transactions starting from NU7. The reason is not complicated: Zcash's transaction format has gone through multiple iterations, and the current mainstream formats are v5 and v6.

But the problem is that Sprout is Zcash's earliest privacy pool, and its transfers can only be completed through the v4 format; the later v5 and v6 do not support Sprout. Therefore, once the upgrade is activated, funds remaining in Sprout can no longer be spent.

However, these coins have not been destroyed; they still count toward the issued supply, but the protocol no longer provides any spending path for them. ZIP 2003 leaves Sprout pool holders with an ambiguous statement: "theoretically it may be possible to reopen in the future, but it may also never be recoverable." In the current NU7 specification, none of the provisions schedule this recovery feature.

As of press time, 22,263 ZEC remain in the Sprout pool, worth approximately $30 million. If holders do not transfer them out before the NU7 network upgrade, they may lose these assets forever. But then again, even if they wanted to transfer the coins out now, they probably wouldn't have enough time.

Migration is fraught with difficulties, with only 14 days left in the window

If the only requirement were for users to transfer funds before the upgrade, things would not have been so complicated. The problem is that Sprout is a rather old system. With the emergence of subsequent solutions such as Sapling and Orchard, Sprout gradually fell out of support in mainstream wallets, and many users may have long stopped using their old wallets, or even forgotten where the funds were stored.

Even among holders who still remember, there are numerous obstacles in the actual migration process.

The official new wallet Zallet, which is being promoted, explicitly states in its documentation that it does not support migrating Sprout spending keys and funds. In other words, even if users migrate their old wallets to the new tool, their existing Sprout funds will not be transferred along with them. Users must first use old tools that still support Sprout (mainly zcashd) to move the coins out and keep the original wallet.dat file. Once the file or key is lost, it cannot be recovered.

Users can also try using third-party recovery tools (such as Argos) to recover from wallet.dat or a standalone Sprout spending key. If the original wallet file still contains spendable note data and cached witnesses, they can attempt to extract the funds directly.

But if the relevant data is missing, users may need to perform a full scan, transferring approximately 280 GB of block data, and the processing time could take several days. With only 14 days remaining before the NU7 network upgrade, the time left for holders to complete the migration may already be insufficient.

Even if the migration is eventually successful, Sprout pool holders still need to face privacy and security concerns. Under the rules of ZIP 308, Sprout funds cannot be transferred directly to Sapling and must first pass through the transparent value pool, so the amounts will be publicly recorded. For people who originally put their coins into Sprout for privacy reasons, this is also a cost worth considering. Not migrating means the funds may become permanently unspendable; migrating may sacrifice some transaction privacy.

Not your keys, not your coins?

For ZEC, 22,000 coins is not particularly large—about 0.45% of all shielded coins on the network and 0.14% of the circulating supply. Even if they all ultimately become unspendable, the impact on the circulating supply and price would be limited.

The community's views on the possible soft freeze of 22,000 ZEC are also divided. Optimists believe that banning all v4-format transactions and suspending Sprout pool transfers is acceptable, because Sprout has long been a dead pool. After the Canopy upgrade in 2020, Sprout was already closed to new inflows, allowing only existing funds to migrate out, and its use cases have continued to shrink.

It should be noted that this was not a unilateral decision by developers. In September 2026, Zcash held a holder governance vote, with about 2.4 million ZEC participating, of which 99.9% supported reducing the block time to 25 seconds, and the vote result also supported disabling v4-format transactions in this upgrade.

Developers have also been reminding users to migrate for years. The NU7 network upgrade is merely the deadline for this migration, and funds that have not yet been migrated are very likely assets that have already been forgotten or lost. Continuing to maintain an old format that almost no one uses offers no benefit to protocol complexity or the potential attack surface.

However, some people believe this sets a bad precedent for Zcash: users hold their private keys, yet because of a protocol upgrade, their assets permanently lose the ability to be spent, which is inconsistent with the values of a privacy coin. If even this cannot be guaranteed, then does so-called privacy self-custody also have an expiration date determined by protocol developers? Bowe himself has also said that the retirement of Sapling could be discussed in the future.

Sprout, being phased out today, still has sufficient justification. But in the future, if similar problems arise again, will the community still accept the same approach? For users who still hold Sprout balances, the most urgent choice now is to confirm their wallet status as soon as possible and do their best to complete the migration before the upgrade takes effect.