The Zcash core development team recently announced a dynamic fee market design proposal, which has sparked discussions in the community about how to price transactions on this blockchain that has been running for over ten years, especially as the current ZEC price, user interest, and institutional attention are rising.

In the past, Zcash adopted a fixed fee model, initially set at 10,000 zatoshi, then lowered to 1,000. This was manageable during periods of low demand, but later became a catalyst for spam attacks, leading to wallet slowdowns and network congestion. Although the previous ZIP - 317 proposal closed some vulnerabilities, the fees remained too low and did not adjust according to usage.

Now, with the rebound in ZEC prices, an increase in new users, and the emergence of digital asset treasuries, the existing fee mechanism is becoming untenable. Some users have reported rising transaction costs, with extreme cases where small privacy transaction fees have even reached double-digit ZEC amounts; as prices rise, the rigid mechanism fails.

The new proposal aims to introduce a simple, stateless dynamic fee mechanism, pricing transactions based on the median fee of the last 50 blocks for each action, while also simulating congestion for combined transactions. This median serves as the “standard fee,” rounded to the nearest power of 10, to reduce transaction correlation and protect user information. During network congestion, a priority channel will be opened at ten times the standard fee.

The system will be launched in three steps: first, off-chain monitoring to collect data; second, the establishment of wallet-side fee policies; and finally, after community agreement, a simple consensus will change it on-chain with additional rules and restrictions. This avoids complexity and fork risks while maintaining Zcash's privacy features, and I believe this proposal is feasible.

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