From Orchard event to Ironwood takeover: Zcash's first layer of expansion is implemented.

Written by: Blockworks

Translated by: AididiaoJP, Foresight News

Summary

In the third quarter of 2026, Zcash implemented the first step of its expansion roadmap. The new full node Zakura, released in mid-July, reduced the synchronization time across the network from about 21 hours on Zebra to about 4 hours; nodes starting from trimmed snapshots took less than two minutes to run. By the end of July, Ironwood (NU6.3) was activated, introducing an alternative shielded pool, whose supply reliability is backed by mathematically validated proofs. Holders quickly migrated, with the proportion of shielded supply rising from about 26% to about 29%, and the total amount of shielded ZEC increasing by about 12%, reaching approximately 4.9 million coins.

Zakura is jointly pushed by Valar Group and Project Tachyon. Valar Group is led by Dev Ojha, co-founder of Osmosis, while Project Tachyon is led by Sean Bowe, co-founder of Zcash. Its design goal is approximately 50,000 private transactions per second, achieved in phases: node performance itself, Tachyon's recursive proofs, and Valar's private information retrieval aimed at wallets. The Zakura Common cryptographic suite released at the end of August improved the proof generation speed on mobile devices by over 14 times, with the proof generation for standard shielded transactions on iPhones dropping from over 3 seconds to about 200 milliseconds.

Holders immediately participated in governance through the new pool. Nearly 2.4 million ZEC, about two-thirds of the eligible supply, took part in a cryptographic vote regarding NU7. They opted for 25-second blocks with a support rate of 99.9%, decided to retain the halving arrangement, and established terms for the network sustainable mechanism (NSM). The mainnet activation is planned for early November. Another independent vote approved grants of about 8.4 million dollars provided by the fund controlled by protocol holders, including approximately 1.8 million dollars to Valar Group and about 1 million dollars to Project Tachyon for its Ironwood-related work.

The migration drove an increase in activity. Transaction volume grew by 21%, reaching about 710,000; over half of the non-coinbase transactions touched the shielded pool, up from about 27% in the second quarter. Network difficulty averaged an increase of 55%. Network REV, the real economic value users pay in transaction fees, grew by about 85%, reaching approximately 204,000 dollars.

Institutional entry broadened in two directions. Grayscale's ZCSH—America's first exchange-traded product providing spot ZEC exposure—began trading at the end of August, initially holding about 387,000 ZEC, attracting approximately 263 million dollars in net inflows by the end of the quarter. Nasdaq-listed Cypherpunk Technologies holds ZEC treasury instruments, which increased its holdings to about 326,000 ZEC and began mining.

Zakura and the Expansion Path

Delivered

Zakura is a full node based on the Zebra codebase, maintaining consensus compatibility with Zcash. Version 1.0.0 was launched on July 15, just ahead of the lifecycle termination of the original node client zcashd on July 18. It comes with Ironwood support, a compatibility mode that simulates the zcashd interface for existing integrations, and a snapshot-based startup method. Zakura nodes started mining mainnet blocks from the day they went live.

The first version significantly shortened the synchronization time. Block synchronization that took 20 hours and 46 minutes on Zebra only needed 4 hours and 20 minutes on Zakura. Starting from a trimmed snapshot of about 11GB only took 1 minute and 50 seconds, and the team calculated that this is 680 times faster than synchronizing through a standard peer-to-peer network. Version 1.2.0 reduced block processing time by 87%. The 1.5.0 version released at the end of September brought faster block submissions and more stable templates for miners.

Cryptographic Layer

Released on August 29, Zakura Common is an open-source cryptographic optimization toolkit that can be adopted by Zcash wallets and nodes. On Zakura's benchmark hardware, mobile proof generation speed was accelerated by over 14 times, desktop proof generation speed increased by over 5 times, Sinsemilla hashing sped up by over 21 times, and zk-SNARK verification sped up by 4 to 8 times. For users, the proof generation time for standard two-input, two-output shielded transactions on an iPhone dropped from over 3 seconds to about 200 milliseconds. Zakura 1.3.0 migrated to a new stack on August 31, with Vizor wallet being one of the early adopters.

Path to Throughput Goals

The team's target is to achieve approximately 50,000 private transactions per second. When Zakura launched, Ojha estimated the network’s shielded capacity under 75-second blocks at about 2.92 TPS and set the goal for two to three years later. With Zcash's existing cryptography, this load requires nodes to process more than 500MB of data per second. Each shielded transaction carries its own proof. Zakura is responsible for node performance and the network. Project Tachyon's recursive proofs allow nodes to validate an aggregated proof instead of thousands of proofs, reducing the demand to about 100MB per second; Valar Group's private information retrieval focuses on the wallet side, with the current stack's throughput cap close to 1 TPS.

Tachyon began integration into Zakura Common on September 28. Zakura also stress-tested large distributed node networks and reported that Zcash is capable of supporting 25-second blocks—NU7 is currently planned to implement this change in November. Bowe co-invented the Halo 2 proof system and has been responsible for Zcash's zk-SNARK implementations since launch and subsequent network upgrades. Both teams initially relied on private donations from ZEC holders to kickstart their work. In September, holders voted to pay for their Ironwood work from the fund controlled by protocol holders.

Network Performance: Transaction Recovery, Difficulty Rises Faster

Zcash processed 710,047 transactions in the third quarter, a 21% increase from 585,178 in the second quarter, and three times the 228,313 in the third quarter of 2025. In the past five quarters, only the fourth quarter of 2025 had higher transactions at 933,284. The average daily transaction volume was about 7,700, up from about 6,400 in the previous quarter; it gradually increased throughout the quarter: averaging about 4,400 in July, climbing to about 13,300 in September, nearly tripling. Part of the growth was attributed to technical factors. The wallet-led Orchard migration itself generated traffic, with Zodl's privacy protection migration standardizing balances (0.1, 0.5, and 1 ZEC), sending at random times, resulting in multiple transactions per migration balance by design.

Hashrate increased faster than activity. As the closest proxy indicator for hash power, network difficulty averaged 222.6 million in the third quarter, up 55% from the second quarter's average of 143.4 million. Since the third quarter of 2025, difficulty has been rising every quarter, growing more than double from 66.3 million. Block production remained on schedule, producing an average of one block every 75.3 seconds, totaling 105,487 blocks, with a target of 75 seconds.

The median transaction fee in the third quarter averaged about 0.13 dollars, up from about 0.07 dollars in the second quarter; the average fee rose from 0.18 dollars to 0.24 dollars. Zebra also supports lower regular fees, now at 1,000 zatoshi per logical operation, down from the previous 5,000, allowing wallets to opt for lower charges.

Zcashd ended its lifecycle on July 18, and its operators shifted to Zebra and Zakura. Zebra 6.0.0 delivered full Ironwood support before activation; Zakura 1.0.1 fixed inheritance issues in a version coordinated with the Zcash Foundation, with no risk to user funds. Ironwood itself was activated on July 28 at block 3,428,143, delayed by one week from the initial plan due to exchange and wallet provider requests for more preparation time. This upgrade introduced the v6 transaction format to the new pool.

Supply and Usage

Shielded Supply Recovery

In the third quarter, the total amount of ZEC in the shielded pool increased by 11.8%, from 4.42 million to 4.94 million; the proportion of shielded supply rose from 26.3% to 29.1%. This quarter largely recouped the losses from the Orchard event in the second quarter. The transparent pool saw a quarterly net decrease of 378,000 ZEC, while the shielded pool increased by 523,000.

The composition of shielded supply changed completely. Ironwood started from zero when activated on July 28, holding 4.06 million ZEC by the end of the quarter. Over 1 million ZEC migrated within seven days of activation, exceeding 3 million by August 16. Orchard held about 3.66 million ZEC when Ironwood was sealed off and stopped accepting new deposits, then fell to 379,000. Sapling decreased by 23% to 479,000 ZEC, and Sprout held about 22,000.

Usage Shifts to New Pool

Shielded activity grew faster than the overall network. In the third quarter, transactions reaching the shielded pool accounted for 52.7% of all non-coinbase transactions, up from 27.4% in the second quarter. Ironwood recorded 226,452 transactions shortly after activation, with an additional 24,976 hybrid transactions from Orchard to Ironwood, carrying migration value through the turnstile. In terms of numbers, the withdrawals from Ironwood to transparent addresses surpassed the deposits, at 159,020 and 67,429 transactions, respectively, although net value still flowed into the shielded pool.

By August 10, Zodl turned migration into a guided wallet feature across all supported platforms; its "Migrate with Privacy" mode implements ZIP-318 to ensure cross-pool transfers do not expose precise balances. Hardware support followed suit. Vizor enabled shielded ZEC for Ledger devices in mid-September, and Ledger Wallet added shielding support for Zcash on September 23.

Total transfer value grew by 17%, reaching 87 million ZEC. Ironwood accommodated 12.4 million ZEC in its first two months, with an additional 3.3 million from Orchard to Ironwood hybrid transfers, and transparent transfers accounted for the rest.

By the end of the quarter, the anonymous set of notes commitments in Sapling and Orchard pools totaled 124.5 million, compared to 124.1 million at the end of the second quarter. This metric predates Ironwood and does not yet account for Ironwood notes, thus underestimating the privacy set available to migrated users.

Market Structure and Economics

Fees and Network REV

In the third quarter, the network REV—the real economic value users pay in transaction fees—was about 204,000 dollars, up 85% from about 110,000 dollars in the second quarter. The fee composition changed due to the migration. Transparent transactions contributed 60.1% of the fee value in the third quarter, down from 83.6% previously; Ironwood contributed 25.9% in its first two months, with Orchard to Ironwood hybrid transactions contributing another 1.7%.

Starting in November, NU7 will alter the operation of these fees. The network sustainable mechanism will remove 60% of transaction fees from circulation, which will then be recycled to miners through future block rewards without changing the maximum supply of 21 million. Holders overwhelmingly supported postponing reissuance to February 2031 with a 96.6% vote, meaning fees will accumulate for several years before returning to the security budget.

Institutional Entry

Grayscale converted its Zcash Trust into ZCSH, the first exchange-traded product in the U.S. providing spot ZEC exposure, beginning trading on August 25. The fund initially held about 387,000 ZEC, custodied by Coinbase, with Jane Street and Virtu acting as authorized participants. By the end of the quarter, it recorded about 263 million dollars in net inflows, with a management scale of about 996 million dollars as of September 25. The fund's early fee income is designated for Zcash ecosystem development. On September 25, Grayscale also applied for a second product—a options-based ZCSH High Income ETF, which will not directly hold ZEC.

Nasdaq-listed Cypherpunk Technologies holds ZEC treasury tools, increasing its holdings from 314,186 ZEC to 326,417 ZEC during the quarter, valued at about 46.3 million dollars by the end of the quarter. The increase included 3,023 ZEC produced from its mining operations, which started in mid-August. Cypherpunk also appointed Dev Ojha, founder of Valar Group, as an advisor.

Liquidity and Accessibility

ZEC's spot trading volume on centralized exchanges increased by 26%, reaching 37.2 billion dollars, covering about 13 trading venues.

On the BNB Chain, ZEC circulates as Binance-Peg tokens, with supply jumping from 120,000 to 220,000 on September 7, the first change since March 2024. On NEAR—where Zodl and Vizor use NEAR Intents Swap service for wallet-to-ZEC exchanges—bridged ZEC fluctuated between approximately 25,000 and 39,500 ZEC, hitting a low on September 16; daily ZEC trading volume through this service increased sixfold that week. By the end of the quarter, it stood at 29,300, down from 37,400 at the end of the second quarter. Encapsulated ZEC asset cbZEC launched on September 1 on Base, bringing ZEC into EVM DeFi as collateral.

Mining and Block Rewards

In the third quarter, block subsidies paid out a total of 141,882 ZEC. Miners received 128,939 ZEC of this amount, with the Zcash Community Grants fund receiving 12,893 ZEC; the development fund reserves accumulated outside those two flows, increasing from about 46,900 ZEC to 66,700 ZEC. The issuance per block is fixed, so these totals track block production, which remains at an average of 75.3 seconds per block.

Mining capacity continued to grow. The average difficulty was 55% higher than in the second quarter, with an average of 16.8 different reward receiving addresses per day, compared to 16.2 in the second quarter. This number measures payment addresses, not individual operators. While difficulty increased, the number of addresses remained stable, indicating that new hash power is not arriving through more centralized payment addresses.

A publicly listed mining company joined the network. Cypherpunk Technologies began mining ZEC through its subsidiary Cypherpunk Mining in mid-August, producing 3,023 ZEC between August 18 and August 31, all of which went into its treasury. Subsequently, it appointed Amanda Fabiano to the board to support expansion. Fabiano previously held senior mining and investment positions at Fidelity and Galaxy.

Mining software was also improved across both node clients. Zakura 1.4.0 added fast proofs for shielded coinbase block templates; the 1.5.0 version at the end of September brought faster block submissions and more stable templates. Zebra 6.4.1 added support for normal shutdown about November 2, ahead of NU7; an urgent security version 6.4.2 released on September 28 recalled 6.4.0 and 6.4.1, requiring Zebra operators to upgrade before NU7.

NU7 modifies block times, but the issuance path remains unchanged. Blocks will change from 75 seconds to 25 seconds; under ZIP-218, block subsidies will be divided by 3 again to keep the total issuance rate per unit time unchanged. The halving remains. Holders voted with 98.9% support to retain fixed interval reductions for new issuance rather than a smoother curve; fees collected under NSM will flow back to miners through block rewards starting in February 2031, supplementing the security budget as subsidies continue to halve.

Organization and Technical Progress

Ironwood and Its Proofs

Ironwood concluded the Orchard chapter opened in the second quarter. Orchard's defect allowed forgery within the pool, but the turnstile prevented any such value from entering the total supply; no evidence of exploitation was found by developers. Ironwood replaced Orchard with a new pool, allowing only withdrawals through the turnstile. The Zakura team focused the migration around three goals: a trustworthy and reliable shielded pool, proving that no forgery occurred in Orchard, and rebuilding the circulating supply.

The new pool is accompanied by a machine-verified proof written in Lean, containing over 2,700 theorems, completed by three teams led by Tal Derei (Project Tachyon), Daira-Emma Hopwood (ZODL), and Gregor Mitscha-Baude (zkSecurity) over a month. It formally verifies that, under the established design assumptions, Ironwood cannot create undetectable forged ZEC. This proof only covers Ironwood and cannot make the same claims about Orchard's history. The Zakura team claims Ironwood is the first shielded pool to undergo formal verification for supply reliability vulnerabilities. Independent audits commissioned by the Valar and Tachyon teams found no significant issues.

Ironwood also provides quantum recoverability according to ZIP 2005. Future quantum computers will not be able to trace stolen funds or forgeries from the pool, and holders retain the path to recover their ZEC. This design does not make today's transactions quantum secure; separate recovery protocols still need to be designed and activated.

Two Holders Votes

The NU7 vote balanced broad participation with ballot privacy. Only ZEC that was spendable in Ironwood at the time of the snapshot on August 24 could vote. The ballots were encrypted, with each ballot broken into 16 unlinkable fragments, allowing validators to tally totals without knowing who voted or how much ZEC they held. Valar Group constructed this protocol using homomorphic encryption and private information retrieval. Voting took place from August 25 to September 14.

Out of about 3.6 million eligible ZEC, nearly 2.4 million participated, far exceeding the 1 million ZEC voting threshold and significantly higher than the 7.25% participation rate for circulating ZEC in the sentiment survey from February. Holders supported the 25-second block (99.9%), retaining the halving (98.9%), choosing to deliver NU7 as soon as possible with a preparedness cutoff set for September 30 (99.3%), and postponing the NSM reissuance to February 2031 (96.6%). They also voted to retire legacy transactions from the Sprout pool.

The second vote concluded on September 29, putting the fund controlled by protocol holders into use. The fund receives 12% of block rewards, with each grant requiring at least 420,000 ZEC votes and simple majority support. Holders approved 17 of 37 funding proposals, valued at about 8.39 million dollars, 93.1% of the requested 9.01 million dollars; the highest vote proposal reached 2.18 million ZEC. They allocated 1.203 million dollars to Valar Group for Ironwood development and reimbursed 599,000 dollars for an external audit; allocated 1 million dollars to Project Tachyon for Ironwood zk-SNARK formal verification (requested 738,942 dollars, plus an additional nominated bonus of 261,058 dollars); allocated 1.95 million dollars to ZODL for core protocol work in the first half of the year. Each allocation to Valar and Tachyon passed with over 99.5% of the votes.

How the Ecosystem Collaborates

Ironwood was jointly proposed by ZODL, Project Tachyon, Valar Group, Zcash Foundation, and Shielded Labs. The five organizations reached an agreement on the final voting wording and unanimously agreed on the content and timeline of NU7 after the results were announced. The Zcash Foundation publicly welcomed Zakura as a full node built on its Zebra codebase, and the two teams also coordinated the release of a security version.

Forward-Looking Roadmap

NU7 is the next delivery, with the timeline set. The upgrade will be activated on the public testnet at block 4,465,026 on October 4, earlier than the previous estimate of around October 6. Developers plan to set the mainnet activation height on October 20 after reviewing testnet results. The target for mainnet activation is November 5. Zakura provides a real-time dashboard for NU7 and testnet faucets for operators testing the upgrade.

Upgrade contents follow holder votes:

• 25-second blocks (ZIP-218), nearly three times faster than the current rate, with block subsidies reduced by the same proportion, keeping the total issuance rate constant.
• Network sustainable mechanism (ZIP 235 and ZIP 237) that removes 60% of transaction fees from circulation, to be reissued to miners through block rewards starting February 2031, while retaining the halving arrangement.
• Retirement of v4 transactions, ending expenditures from the legacy Sprout pool.

NU7 does not introduce new transaction formats and should not have a significant impact on wallets, but full nodes, indexers, and block explorers will need upgrades. Zcash Shielded Assets are still under discussion and do not fall under NU7.

Expansion work will continue after NU7. Project Tachyon began a series of code releases, specifications, ZIPs, and audit reports on September 28, while also starting integration into Zakura Common. Tachyon's shielded pool is built around proof aggregation and the upper bound on states that must be stored by validators, and is the next step protocol towards throughput goals. Valar Group's private information retrieval work addresses wallet-side limitations, while Zakura's experimental peer-to-peer transmission aims for block propagation below 500 milliseconds in the worst-case scenario.

Post-quantum protection plans are a phased, multi-upgrade strategy. Ironwood's quantum recoverable notes are the first step; the fragile pool will be disabled before the arrival of cryptographic-related quantum computers, while holders will still be able to recover funds.

Zcon7 will be held from October 27 to 29 in Cancun, coinciding with the tenth anniversary of Zcash on October 28, just a week before NU7 reaches the mainnet.

Conclusion

In the third quarter of 2026, Zcash moved from recovery to the first phase of expansion. At the beginning of the quarter, the Orchard pool still bore the aftereffects of the second quarter's events; by the end of the quarter, 4.06 million ZEC had entered a formally verified alternative pool, with the proportion of shielded supply rebounding to 29.1%. Holders voted twice: once to confirm the next upgrade contents with nearly two-thirds of the eligible supply participating; the second time to pay for completed protocol work amounting to 8.39 million dollars from the fund controlled by holders.

Zakura was the most iconic achievement of this quarter. It shortened complete synchronization from more than half a day to about four hours, reduced snapshot startup to less than two minutes, and accelerated mobile shielded transaction building by over 14 times. It also advanced performance work into the released software, reaching users without the need for network upgrades. As of the third quarter, the first layer on the way to the 50,000 TPS goal has been launched, and the second layer (Tachyon recursive proof) has begun integration, while the next protocol-level change—the 25-second block—has a date and started running on the testnet from October 4.

Network economic data rose in tandem. Hashrate increased, with difficulty growing by 55%; network REV grew by 85% to approximately 204,000 dollars; over half of non-coinbase transactions utilized the shielded pool. Institutional entry was broadened through Grayscale's ZCSH, which attracted approximately 263 million dollars in net inflows by the end of the quarter; Cypherpunk's treasury and mining operations are also growing.

The unresolved issues from the second quarter are the Orchard pool itself. Approximately 379,000 ZEC remains in the sealed pool, with every coin leaving passing through the turnstile, establishing formal evidential grounds that the migration cannot provide about Orchard's history.

Three measurable milestones are set for the fourth quarter: NU7 reaches the mainnet on November 5, bringing 25-second blocks and a network sustainable mechanism; Ironwood migration clears the remaining 379,000 ZEC in Orchard; Tachyon moves from integration to deployment.