The Network Sustainability Mechanism (NSM) is Zcash's plan to recycle ZEC into future block rewards, so that miners are still paid after scheduled issuance runs out. NU7, activated on 6 November 2026, deployed two parts of it. ZIP 235 removes 60% of every block's transaction fees from circulation, and the miner keeps 40%. ZIP 237 tracks the removed ZEC in an "NSM Value Balance" and reissues it slowly from block 8,939,664, which we estimate falls around February 2031. The four-year halving schedule and the 21 million cap are kept. NU7 did not deploy ZIP 233, the voluntary way to remove ZEC from circulation, or ZIP 234, which would have replaced halvings with a smooth curve (ZIP 259). The amounts are small so far. The balance started at 368.58 ZEC of rewards that miners left unclaimed before 2024. By our count about 7.4 ZEC of fees were added in NU7's first six days. We checked one block on chain: its miner received exactly 40% of the fees.
This page explains each ZIP, the formulas in plain language, what is visible on the chain today, and what the NSM means for holders, miners and the supply.
The NSM in one table
| Part | ZIP | Status | Deployed in NU7? | What it does |
|---|---|---|---|---|
| Remove 60% of fees | ZIP 235 | Proposed | Yes | Each block: 60% of total fees removed from circulation, 40% to the miner |
| Halving-preserving reissuance | ZIP 237 | Proposed | Yes | Tracks the NSM Value Balance; reissues a small fixed fraction per block from 8,939,664 |
| Voluntary removal | ZIP 233 | Draft | No | Lets anyone remove ZEC in a transaction |
| Issuance smoothing | ZIP 234 | Draft (replaced) | No | Would replace halvings with a smooth curve |
| Blocks balance exactly | ZIP 236 | Final (from NU6) | Already active | Miners must claim the full reward, so nothing is lost by accident |
ZIP 259, the NU7 deployment ZIP, lists ZIP 235 and ZIP 237 among NU7's consensus changes and states: "NU7 does not deploy ZIP 233 or ZIP 234." ZIP 234 now carries a note that it "was replaced by ZIP 237… which Network Upgrade 7 deploys instead".
Why Zcash wanted an NSM
ZIP 233's motivation sets out the problem it shares with Bitcoin: once scheduled issuance ends, "the network becomes reliant on transaction fees for the security budget". The NSM's answer is to create "headroom" between the coins in circulation and the 21 million MAX_MONEY cap. ZEC removed today can be paid out again later as block rewards.
ZIP 237 lists its objectives:
- "an automated mechanism that allows users of the network to contribute to the long-term sustainability of the network";
- "enable ZEC that has been removed from circulation to be reissued in the future";
- "retain the existing ZEC supply cap of 21 million, as an upper bound on issuance";
- issuance identical to the historical schedule "whenever the NSM Value Balance is zero";
- issuance that is "easy for all network users to understand and predict";
- "preserve Zcash's existing 4-year halving schedule".
The sixth point is what separates ZIP 237 from ZIP 234. ZIP 237 says it "differs only in Key Objective 6": ZIP 234 "replaces the halving schedule with a smooth curve", while ZIP 237 "shows that reissuance does not require that change".
Part 1: 60% of fees removed (ZIP 235)
The rule
For each block, take the total fees paid by its non-coinbase transactions. 60%, rounded down, is removed from circulation. The miner gets the rest. ZIP 235 states the requirements:
- "For each block, 60% (rounded down) of the total fees are to be removed from circulation."
- "The rule does not require any transaction format change."
- "Any fractions are rounded in favor of the miner."
The calculation is done once per block, not per transaction. That choice matters: "Rounding each transaction's fee separately would, in aggregate, remove less than 60% of the fees: for example, two transactions that each pay a fee of 1 zatoshi would each contribute 0."
Because ZIP 236 makes the coinbase claim its full amount, "the miner receives exactly MinerFees(height). A miner cannot remove less than the required amount by underclaiming, and cannot claim more than it is entitled to."
Checked on chain
We looked at block 3,562,083 (11 November 2026, 13:28 UTC) through Blockchair:
| Item | Zatoshis |
|---|---|
| Fees paid by the block's transactions | 1,405,675 |
| 60% (removed) | 843,405 |
| 40% (miner) | 562,270 |
| Blockchair "reward" minus "generation" | 46,395,604 − 45,833,334 = 562,270 |
The miner's extra on top of the subsidy is exactly 40% of the fees. The rule is working as written.
How much has been removed so far?
Using Blockchair's aggregate of transaction fees for blocks 3,543,405 to 3,564,000 (Blockchair API), read on 12 November 2026:
| Day (UTC) | Fees paid (ZEC) | 60% removed (ZEC, approx.) |
|---|---|---|
| 6 Nov (from 02:34) | 1.478 | 0.887 |
| 7 Nov | 1.241 | 0.744 |
| 8 Nov | 1.238 | 0.743 |
| 9 Nov | 1.533 | 0.920 |
| 10 Nov | 4.452 | 2.671 |
| 11 Nov | 2.152 | 1.291 |
| Total, blocks 3,543,405 – 3,564,000 | 12.375 | ≈ 7.43 |
The "removed" column is 60% of the day's fees. The real figure is a few zatoshis lower, because rounding happens per block in the miner's favour. Over the five full days, fees averaged about 2.12 ZEC a day. Kept up for a year, that would remove about 465 ZEC.
Compare with ZIP 235's own estimate. From 100,000 historical blocks, ZIP 235 calculated about 369.7 ZEC of fees a year, "If 60% of these fees are removed from circulation, that would be about 221.8 ZEC per year." Our first week ran at roughly twice that, but six days is far too short to extrapolate. One busy day (10 November) accounted for more than a third of the total.
For scale: the block subsidy currently issues about 1,800 ZEC a day. Fee removal is about 0.1% of that.
Part 2: the NSM Value Balance and reissuance (ZIP 237)
What the balance is
ZIP 237 defines the NSM Value Balance as "the total ZEC/TAZ that has been removed from circulation and not yet reissued: funds removed via a registered mechanism, plus block subsidy and fees left unclaimed by coinbase transactions prior to NU6". It "is not part of the Issued Supply". It is public consensus state that every node tracks, and ZIP 259 notes that it "introduces no new transaction-level data".
Its starting value: 368.58 ZEC
Before NU6, miners could claim less than they were owed, and the difference simply was not issued. ZIP 237 counts all of it into the starting balance:
| Zatoshis | |
|---|---|
| Scheduled subsidy through block 2,726,399 (the last pre-NU6 block) | 1,575,000,000,000,000 |
| Actual issued supply at that height | 1,574,963,141,554,480 |
| Unclaimed, now the initial NSM Value Balance | 36,858,445,520 (368.58445520 ZEC) |
Since NU6, ZIP 236 requires the coinbase to claim everything, so this part is "a fixed historical amount".
When reissuance starts
ZIP 237 deliberately waits. "No reissuance occurs between NU7 activation and NSM_REISSUANCE_HEIGHT, so the NSM Value Balance accumulates during that interval." The start height on Mainnet is 8,939,664 (ZIP 259).
That height was chosen by rule, not by hand. It is the first block after the third halving where a reference reissuance amount drops below the scheduled block subsidy. ZIP 237 shows the crossover: "At height 8,939,663 the rounded reference subsidy is 26,041,667 zatoshi, above the scheduled 26,041,666; at 8,939,664 it is 26,041,663, below it."
At 25 seconds per block from block 3,564,028 (12 November 2026), 8,939,664 is about 4.3 years away, around February 2031. That is our estimate; the height is fixed, the date is not.
ZIP 259 records that this was contested: "The polls did not reach a shared majority position on when NSM reissuance should begin."
How fast it reissues
From the start height, every block adds:
AdditionalBlockSubsidy = ceiling(BLOCK_SUBSIDY_FRACTION × NSMValueBalance of the previous block)
With 25-second blocks, BLOCK_SUBSIDY_FRACTION is 1375 / 10,000,000,000 (0.0000001375). ZIP 237 chose it so the balance "should halve over the same period as the block subsidy does": (1 − 1375/10¹⁰)^5,040,000 ≈ 0.50007.
In plain terms: each halving period, about half of whatever is in the NSM balance is paid out, spread smoothly across every block.
Example sizes
| NSM Value Balance | Extra per block | Extra per day (3,456 blocks) |
|---|---|---|
| 368.58 ZEC (the historical seed) | ≈ 0.00005 ZEC | ≈ 0.18 ZEC |
| 376 ZEC (seed plus ~7.4 ZEC of fees, our estimate) | ≈ 0.0000517 ZEC | ≈ 0.18 ZEC |
| 100,000 ZEC (ZIP 237's illustration) | 0.01375 ZEC | ≈ 47.5 ZEC |
ZIP 237 describes the 100,000 ZEC case as "a very large amount removed from circulation (much larger than expected)" that "would elevate issuance by a relatively small amount". The per-block figure is "initial": it falls as the balance shrinks.
Where the reissued ZEC goes
The additional subsidy is added to the block subsidy: "BlockSubsidy(height) := ScheduledBlockSubsidy(height) + AdditionalBlockSubsidy(height)". All other rules apply to the total, so "funding streams receive their fixed percentage of the total (scheduled plus additional) block subsidy". Under current rules, though, both funding streams end at the third halving, block 6,132,390 (ZIP 214), before reissuance begins. So unless new streams are added, reissued ZEC would go to miners. See the next Zcash halving.
What the NSM does to the supply cap
ZIP 237's key safety property: "from NU7 activation the sum of the Issued Supply and the NSM Value Balance changes by exactly the Scheduled Block Subsidy each block. Issuance therefore never exceeds the supply cap."
| Statement | True? | Source |
|---|---|---|
| The NSM can create ZEC beyond 21 million | No | ZIP 237 |
| Removed ZEC is destroyed for ever | No: it is reissued later | ZIP 235 |
| The halving schedule is unchanged | Yes | ZIP 237 |
| Final supply is exactly 21,000,000 ZEC | No: about 0.68 ZEC below MAX_MONEY | ZIP 218, ZIP 237 |
| The NSM reissues the NU7 rounding shortfall | No | ZIP 237 |
On the last two rows: NU7's 25-second blocks divide each reward by three and round down, which "reduces the current cap by about 0.50 ZEC on Mainnet (to about 0.68 ZEC below MAX_MONEY), because ZIP 218's rounding lowers the Scheduled Block Subsidy and the NSM does not reissue that shortfall."
A consensus rule makes sure nobody can cheat: "If NSMValueBalance(height) would become negative… then all nodes MUST reject the block as invalid."
ZIP 233: voluntary removal, not deployed
ZIP 233, still a Draft, would let anyone choose to remove ZEC from circulation in a transaction, with the intent "that the funds will be returned to circulation through future block subsidies". Its authors call the combination of ZIPs 233, 235 and 237 the "Network Sustainability Mechanism".
ZIP 233 needs a new transaction field ("bundle type 6 variant 0… in the V7 transaction bundle type registry defined in ZIP 248"). NU7 introduced no new transaction format (ZIP 259: "NU7 introduces no new transaction format"), which is one reason ZIP 233 was left out.
ZIP 233 is frank about a privacy cost: "ZIP 233 adds a new type of transparent transaction event that is fully visible to chain observers… transactions that intentionally remove funds from circulation are likely to represent a small fraction of Zcash transactions, and so this will provide another tool that adversaries may use to be able to segment users."
If it is ever deployed, wallets are expected to explain it. ZIP 315 says wallets supporting ZIP 233 "SHOULD display clear, user-friendly messaging at transaction confirmation time". It adds that this "does not apply to the automatic removal of transaction fees specified in ZIP 235… which occurs without user action".
ZIP 237 is built to accept it later: funds removed by ZIP 233 "are credited to the NSM Value Balance if and when that mechanism is deployed".
Why not just burn the fees?
ZIP 235 compares itself to Ethereum: the mechanism "involves temporarily reducing the supply of ZEC, similar to asset burning in Ethereum's EIP-1559, but with long-term sustainability benefits. Unlike a permanent burn, the removed funds are intended to be reissued through future block subsidies."
The 40% left to miners is deliberate: "By maintaining a 40% share of transaction fees for miners, we continue incentivizing miners to prioritize including transactions in their blocks."
ZIP 235 also anticipates revisiting the split: "If transaction fees were to increase, further modifications can easily be proposed to alter the 60%/40% split." It suggests other future sources of removal, including "ZSA fees", "Cross-chain bridge usage" and "Storage fees", none of which exist today.
What the NSM means for you
| You are | Effect today | Effect later |
|---|---|---|
| A holder | None on your balance. Circulating supply grows very slightly more slowly | From ~2031, a very small extra issuance |
| A payer | Fees unchanged; the fee formula is ZIP 317 | Unchanged |
| A miner | Fee income is 40% of what it was | Reissued ZEC added to rewards from 8,939,664 |
| A dev fund recipient | None | Streams end at 6,132,390 under current rules, before reissuance |
| A data provider | Total "supply" now has three parts: issued, NSM balance, cap headroom | Same |
For most users, the only visible change is that supply statistics need care. A site that adds up all fees as "paid to miners" is now 60% too high, and one that counts the NSM balance as part of the circulating supply is overstating it.
A worked example over twelve years
To make the mechanism concrete, here is a stylised path for the NSM Value Balance. It uses our measured fee rate and the ZIP 237 formula. It is an illustration, not a forecast: fees could be far higher or lower.
Assumptions: the balance starts at 368.58 ZEC at NU7; 60% of fees adds about 465 ZEC a year (our first-week rate, held constant); reissuance starts at block 8,939,664 and pays out about half the balance per four-year halving period.
| Point in time | What happens to the balance | Approximate balance |
|---|---|---|
| NU7, November 2026 | Seeded with the unclaimed historical rewards | 369 ZEC |
| November 2028 (third halving) | About two years of fee removal added, nothing paid out | ≈ 1,300 ZEC |
| February 2031 (reissuance starts) | About 4.3 years of fee removal added | ≈ 2,350 ZEC |
| From February 2031 | Each block pays out 0.0000001375 of the balance | ≈ 0.00032 ZEC extra per block at first (≈ 1.1 ZEC a day) |
At about 2,350 ZEC, the first reissued amount per block would be 2,350 × 0.0000001375 ≈ 0.00032 ZEC. That is about 0.1% of the 0.26041666 ZEC scheduled subsidy at that point, or roughly 1.1 ZEC a day across 3,456 blocks. Fees keep flowing in, so the balance does not simply fall by half every four years; it settles where removals and reissuance balance out.
The point of the example: on today's fee levels, the NSM is a small adjustment to issuance, not a new source of miner income. It becomes significant only if fees grow a great deal, or if a mechanism like ZIP 233 lets large amounts be removed voluntarily.
The NSM and the four-year halving: how they fit
People often ask whether the NSM is a quiet way to end halvings. ZIP 237's design answers that directly. "The step function around the 4-year halving intervals inherited from Bitcoin is retained unchanged." The extra reissuance is "a smooth curve on top of the existing schedule".
Three properties make this work:
- If the balance is zero, nothing changes. "The new issuance scheme is identical to the existing schedule whenever the NSM Value Balance is zero."
- The payout rate scales with the halving interval.
BLOCK_SUBSIDY_FRACTIONis "stated as a function of the halving schedule rather than as a constant, so that it keeps this property whatever the block target spacing". ZIP 237 notes that a fixed numerator of 4126, the value from ZIP 234, "would instead halve the balance about every 1.33 years under ZIP 218, because it would apply three times as often". - Future upgrades are constrained. ZIP 237's appendix: "Future protocol changes may not increase the payout rate of the NSM Value Balance to a reasonable approximation beyond the one-halving-period half-life constraint."
The design also keeps the payout from ever being zero once reissuance starts: rounding up "to the next zatoshi" means even a tiny balance is eventually fully paid out. Because of the rounding, the curve is approximate for small balances: "a balance of 1 zatoshi is issued in the next block rather than halving over a halving period".
How the NSM appears in supply statistics
Since NU7, a careful supply figure has three parts:
| Quantity | Meaning | Where it is |
|---|---|---|
| Issued supply | ZEC that exists in the transparent and shielded pools and the dev-fund lockbox | Chain value pools (ZIP 209) |
| NSM Value Balance | ZEC removed or unclaimed and waiting to be reissued | Consensus state, not spendable |
| Remaining scheduled issuance | What the halving schedule has yet to create | Calculated from the height |
These add up to roughly the supply cap, with the small rounding shortfall described above. Sites that show "circulating supply" differ on whether they include the lockbox and how they treat the NSM balance. When two sites disagree by a few hundred ZEC, the NSM balance is a likely reason.
How to check the NSM yourself
- Pick a block on our explorer or Blockchair and note its total fees.
- Check the coinbase. The miner's output should equal its subsidy share (currently 41,666,668 zatoshis) plus 40% of the fees, rounded in the miner's favour.
- Sum fees over a range of blocks since 3,543,405 and take 60% for an approximate removal total.
- Run a node. A full node tracks the NSM Value Balance as consensus state. Zebra is the reference implementation (ZIP 237 lists Zebra pull requests). See zcashd is gone.
Our charts and halving page show issuance over time.
Timeline
| Date or height | Event | Source |
|---|---|---|
| 16 August 2023 | ZIP 233 created | ZIP 233 |
| 23 August 2023 | ZIP 234 created | ZIP 234 |
| Block 2,726,400 (NU6, November 2024) | Coinbase must claim in full (ZIP 236); the unclaimed total is frozen at 368.58 ZEC | ZIP 237 |
| August–September 2026 | NU7 coinholder and community polls | ZIP 259 |
| 19 August 2026 | ZIP 237 created | ZIP 237 |
| Block 3,543,405 (6 November 2026) | NU7: fee removal starts; NSM balance seeded | ZIP 259 |
| Block 6,132,390 (~November 2028) | Third halving; funding streams end | ZIP 214 |
| Block 8,939,664 (~February 2031) | Reissuance begins | ZIP 259 |
The NU6 activation date is the timestamp of block 2,726,400 on Blockchair, 23 November 2024.
Open questions
- Will ZIP 233 ever be deployed? It needs a new transaction format and is still a Draft.
- Will the 60/40 split change? ZIP 235 expects it could, "based on real-world data and network dynamics".
- Will funding streams resume after 2028? That decides whether reissued ZEC goes only to miners.
- Will the start height hold? It is derived from the NU7 activation height by a formula in ZIP 237. Only a future network upgrade that changed block timing or issuance would move it, and it would then be recalculated the same way.
- How will data sites report it? Expect differences in "circulating supply" figures until conventions settle on whether the NSM balance counts.
- Will fees grow? At current levels, fee removal is tiny. ZIP 235 notes fees are not expected to exceed the block subsidy "for the next 8–10 years".
Our recommendation: For coverage of tokenomics and supply debates, the team's Telegram channels @cryptoresearch and @BitcoinInsightsDaily follow issuance changes across major coins.
FAQ
What is the Zcash NSM?
The Network Sustainability Mechanism: rules that take ZEC out of circulation (today, 60% of fees) and reissue it slowly as future block rewards, while keeping halvings and the 21 million cap.
Is the NSM live?
Partly. NU7 (6 November 2026) deployed fee removal (ZIP 235) and the balance and reissuance rules (ZIP 237). Reissuance itself starts at block 8,939,664.
Does Zcash burn fees now?
It removes 60% of fees from circulation, but they are not destroyed for ever: ZIP 235 calls this "temporarily reducing the supply" and the funds will be reissued.
How much ZEC is in the NSM Value Balance?
It started at 368.58445520 ZEC of historical unclaimed rewards. By our count, about 7.4 ZEC of fees was added in NU7's first six days, so roughly 376 ZEC by 12 November 2026.
When does reissuance begin?
At block 8,939,664, around February 2031 at 25-second blocks.
Can the NSM increase the supply above 21 million?
No. ZIP 237 ensures issued supply plus the NSM balance grows only by the scheduled subsidy.
Did NU7 change the halving schedule?
No. ZIP 237 keeps four-year halvings. ZIP 234, which would have smoothed them, was not deployed.
Can I remove my own ZEC from circulation?
Not yet. That is ZIP 233, which NU7 did not deploy.
Do I pay more in fees because of the NSM?
No. Fees still follow ZIP 317; only their destination changed.
Why do miners get only 40% of fees?
To keep an incentive to include transactions while directing the rest to long-term security. ZIP 235 notes fees are currently too small for this to matter much to miners.
Is the NSM the same as Ethereum's fee burn?
Similar in the short term, different in the long term. ZIP 235 compares it to EIP-1559, but "Unlike a permanent burn, the removed funds are intended to be reissued through future block subsidies."
Why was reissuance delayed until 2031?
ZIP 237 picks the first block after the third halving where a reference reissuance amount falls below the scheduled subsidy, which on Mainnet is 8,939,664. ZIP 259 notes the community polls did not agree on a start date, so the rule-based height was used.
Does the NSM affect shielded privacy?
The fee removal and reissuance are calculated from already-public values; ZIP 235 and ZIP 237 both state they disclose no additional transaction information. ZIP 233's voluntary removal, which was not deployed, would add a visible transaction event.
Where can I verify these numbers?
In any post-NU7 block's coinbase (miner output = subsidy share + 40% of fees), or by running a Zebra node, which tracks the NSM balance.
Sources
- ZIP 235: Remove 60% of Transaction Fees From Circulation
- ZIP 237: Network Sustainability Mechanism: Halving-Preserving Issuance
- ZIP 233: Network Sustainability Mechanism: Removing Funds From Circulation
- ZIP 234: Network Sustainability Mechanism: Issuance Smoothing
- ZIP 236: Blocks should balance exactly
- ZIP 259: Deployment of the NU7 Network Upgrade
- ZIP 218: 25-second Block Target Spacing
- ZIP 214: Consensus rules for a Zcash Development Fund
- ZIP 209: Prohibit Out-of-Range Chain Value Pool Balances
- ZIP 315: Best Practices for Wallet Implementations
- ZIP 317: Proportional Transfer Fee Mechanism
- Blockchair Zcash explorer (block 3,562,083; block timestamps)
- Blockchair API documentation (fee aggregates)