Zcash Proposes Dynamic Fee Market to Address Rising Costs and Network Congestion

According to PANews, Shielded Labs has introduced a new proposal to establish a dynamic fee market for Zcash, aiming to tackle the increasing transaction costs and network congestion. The proposal suggests moving away from the static fee model that Zcash has traditionally used, which initially set fees at 10,000 'zatoshi' before reducing them to 1,000. While this model functioned during periods of low demand, it eventually led to a surge of 'dust' transactions, causing wallet congestion and on-chain transaction blockages. Previously, the ZIP-317 proposal adopted an operation-based accounting method, which addressed abuse issues but maintained predictable and low fees that could not adjust according to usage. The latest proposal introduces a simple, stateless dynamic fee design based on 'comparables,' using the median fee observed for each operation over the past 50 blocks as a benchmark. Synthetic transactions are added to simulate ongoing congestion. The median fee becomes the standard fee, divided into intervals by powers of ten to reduce linkability and protect user information. In high-pressure situations, a priority channel will temporarily open, charging ten times the standard fee, allowing users to compete for block space without redesigning the protocol. The system is planned to be implemented in phases, starting with off-chain monitoring, followed by wallet strategy implementation, and finally, a simple consensus change upon approval, with expiration height limits and powers of ten fee rules. This approach avoids the complexity and fork risks associated with mechanisms like EIP-1559 while maintaining Zcash's privacy constraints. Other proposed ideas include using mining difficulty as a long-term heuristic indicator for fees priced in USD and adjusting prices based on mempool pressure.