Zcash developers have agreed on consensus rule changes for the upcoming Ironwood upgrade following the Orchard pool flaw that exposed the network to potentially unlimited minting of counterfeit ZEC.
In a Monday post on X, Zcash developer Sean Bowe outlined the rule changes, stating that the Ironwood upgrade will introduce a new shielded pool using the Orchard protocol.
Under the plan, the new circuit for the Orchard protocol — used by both the existing Orchard pool and the new Ironwood pool — will include a flag that can disable payments to other users within the pool while maintaining the ability to create change notes, a feature Bowe said "enables a privacy safeguard."
Once the upgrade is activated, the flag will be enabled for the old Orchard pool. Wallets will prevent new incoming payments to the old pool by constraining the "valueBalance" field, according to Bowe. With the design, new payments sent to Orchard receivers will route to the new pool.
Orchard is Zcash's main shielded transaction pool, which enables users to send and receive ZEC with full zero-knowledge privacy. The Orchard circuit is a zero-knowledge proof system that verifies that only valid transactions are included.
"Ironwood is the next step in hardening the Zcash protocol," the proposal said. While Zcash Co-founder Zooko Wilcox said the timeline for the upgrade remains uncertain, Zcash Open Development Lab (ZODL) wrote in the forum that it is targeting late July for Ironwood activation.
Ensuring supply
Bowe explained that the upgrade leverages the existing turnstile mechanism to ensure the circulating supply of ZEC remains bounded.
"This combination enforces a bound on the circulating supply of ZEC through the use of the existing turnstile mechanism; the amount of ZEC that anyone can transact with is no more than the amount that is supposed to exist," said Bowe.
The Ironwood upgrade follows the disclosure of a severe vulnerability in Zcash's Orchard shielded pool that could have allowed attackers to mint potentially unlimited amounts of counterfeit ZEC.
Due to the strong privacy properties of the Orchard pool, the Zcash team could not determine whether, or how much, counterfeit ZEC was minted before the vulnerability was patched.
The upgrade would allow users to migrate funds from the old pool, reducing exposure to potential risks and eventually providing evidence that counterfeit minting never took place, Bowe said.
The team will now focus on implementation, specifications, and ecosystem support while conducting audits and formal verification.
ZEC rebounds
Last week's disclosure of the vulnerability rattled market confidence, triggering a more than 50% plunge in ZEC's price from around $630 to roughly $303.
ZEC (ZEC) has since pared some losses, rising 6.1% over the past 24 hours to $450.49, according to The Block's price page. This reflects a 48.7% recovery from the June 5 low of $303.
Many traders, who invested in Zcash's zero-knowledge-backed privacy focus, questioned the protocol's long-term security and reliability. This includes BitMEX Co-founder Arthur Hayes, who said that he has liquidated his entire ZEC position following the vulnerability disclosure.
"We resolved the issue, battle-tested our incident support processes, built stronger relationships with others who support the network, tested our own resilience, and unified as a community of builders to agree on a path forward," Josh Swihart, founder of Zcash Open Development Lab, wrote on Sunday.