Zcash Jumps 12% as Its NU7 Upgrade Nears, Set to Freeze $16 Million Left in Its Oldest Privacy Pool

Zcash holders who still have coins sitting in the network's oldest privacy pool are running out of time. Within hours, those coins stop being spendable, even for owners who hold valid private keys.

The cause is NU7, Zcash's next network upgrade. According to CoinDesk, about 12,226 ZEC, worth roughly $16 million at $1,300 per coin, remained in the Sprout pool on Thursday morning.

At the same time, ZEC was the best performer among the largest tokens. CoinDesk's markets desk reported it up 11.7% to about $1,318, with $1.2 billion traded over the previous day.

What happens at block 3,543,405

NU7 is scheduled to activate at block 3,543,405. CoinDesk, citing Blockchair, said the chain stood at block 3,542,391 at 05:24 UTC on Thursday, 5 November.

At one block every 75 seconds, that left about 21 hours. CoinDesk put activation near 9:30 p.m. ET on Thursday, which is about 4:30 a.m. Friday in Kyiv.

The exact moment depends on how quickly miners find blocks. CoinDesk noted the upgrade could slip into early Asian hours on Friday.

Why Sprout coins will be frozen

The change is defined in ZIP 2003, titled "Disallow version 4 transactions." From NU7 onward, the network will only accept version-5 and version-6 transactions.

That matters because, as ZIP 2003 explains, Sprout transfers can only be represented in v4 transactions. Neither the v5 format from NU5 nor the v6 format from NU6.3 supports Sprout.

So once the new rules kick in, any balance still in Sprout simply cannot move. It is a consensus rule change, the kind explained in our guide to soft forks and hard forks.

Sprout launched with Zcash in October 2016, CoinDesk noted. It was later replaced by the Sapling and Orchard pools, which ZIP 2003 says brought big speed gains and features such as viewing keys.

A last-minute rush that mostly already happened

Sprout has been draining fast. CoinDesk, using ZecStats data, said the pool held roughly 22,263 ZEC a week earlier, almost double Thursday's level.

Most of the exodus came on Sunday, when about 9,094 ZEC left. By Wednesday the flow had slowed to a trickle, with just 40 ZEC moving out.

That slowdown hints that much of what remains may belong to wallets whose keys are lost. But CoinDesk stressed that the public pool balance cannot identify owners or show how much is truly abandoned.

For anyone checking old records, CoinDesk pointed to one simple clue: Sprout addresses begin with "zc."

Frozen, not burned

This is not a confiscation. ZIP 2003 says plainly that it does not propose to unissue, burn or permanently remove Sprout funds.

The coins stay in Zcash's issued supply, including for issuance calculations under the proposed Network Sustainability Mechanism. A future upgrade could, in theory, re-enable v4 transactions or add another recovery route.

The spec is blunt about the odds, though. It warns that "the ability to spend Sprout funds may never be re-enabled."

Why developers are cutting Sprout loose

ZIP 2003 opens its case with a simple line: "Zcash is an extremely complex protocol." Some of that complexity, it argues, comes from functionality that is now obsolete.

Parts of Sprout that are not shared with Sapling still sit on live transaction-acceptance paths. The spec says that burden has to be considered for denial-of-service attacks on the mempool and block processing.

Because almost nobody uses Sprout, node developers have little reason to optimise it. ZIP 2003 also notes that the deprecation of zcashd removed the only maintained software still offering Sprout wallet support.

Retiring the pool, in other words, trades a small stranded balance for a smaller attack surface across the whole network.

Faster blocks and a market rally

Sprout's retirement is not the only change. CoinDesk reported that NU7 cuts the target time between blocks from 75 seconds to 25, so users wait less for confirmations.

Traders seem to like it. ZEC's jump came during a wider rebound after Democrats won both houses of Congress, the result we covered in yesterday's election report.

CoinDesk had bitcoin up 5.7% at about $80,484 during Asian hours on Thursday. Ether rose 8% to about $2,425, while solana gained 5.9% to $96 and XRP added 4.7% to $1.31.

KuCoin's daily report counted about $950 million in liquidations over 24 hours, roughly $560 million of them shorts. So part of the move was traders being squeezed, not fresh buying.

KuCoin also noted that spot bitcoin ETFs saw about $116 million in net outflows on 3 November, a third straight day of withdrawals.

The privacy question in Washington

There is a political cloud over the rally. CoinDesk said the incoming Democratic majorities could complicate crypto legislation and bring more scrutiny of financial privacy and illicit finance.

That view came from an industry executive and a Zcash community policy memo, according to CoinDesk. For a coin built around encrypted payments, that scrutiny is worth watching.

Investing.com added that Democrats helped block the CLARITY Act earlier this year, and that a large share of them want tougher anti-money-laundering rules for crypto.

What to watch next

First, the activation itself. Watch whether NU7 lands cleanly at block 3,543,405 and how much ZEC is still in Sprout when it does.

Second, the new 25-second blocks. Faster confirmations are a real usability gain, but the first days after any upgrade are when bugs tend to show up.

Third, the price. ZEC has been volatile this year, as our earlier look at Zcash whales cutting their holdings showed. Upgrade rallies can fade once the event passes.

And if you ever held ZEC in an old "zc" address, the window to move it is closing now. After NU7, those coins may stay locked for good.