Flare, a smart contract blockchain network focused on connecting decentralized data with multiple chains, has unveiled a new governance proposal that aims to significantly revise the tokenomics of its native FLR token. The move focuses on reducing inflation, implementing protocol-level maximum extractable value (MEV) capture, and overhauling network fee and reward structures.
Inflation reduction and MEV integration in new proposal
Flare outlined a plan to lower FLR’s annual inflation rate from 5% down to 3%, bringing down yearly token issuance from 5 billion to 3 billion. The adjustment targets long-term sustainability for network economics through a more streamlined supply schedule and aims to address concerns from the community over excess token dilution.
Another component introduces the Flare Income Reinvestment Entity (FIRE), which will manage value captured at the protocol level. The proposal states that revenue from onchain activities, including MEV from arbitrage and liquidations, would be directed into ecosystem incentives, token buybacks, and token burns via this new entity.
Flare’s mechanism seeks to create a stronger linkage between network activity and token demand, proposing a controlled transition where block building is increasingly consolidated at the protocol level. This effort is designed to retain value that often leaves the ecosystem through independent MEV searchers across other blockchains.
The builder model aims to gradually replace external block producers by managing block construction within the protocol, which could, over time, recapture and redistribute more value to participants and infrastructure providers.
Flare, developed to support ventures like decentralized finance and secure data transfer across various protocols, has positioned MEV capture as essential for evolving its network’s economic sustainability. FIRE is expected to serve as a central component for managing and channeling these revenues effectively.
Network activity, fee adjustments, and voting process
The network recently saw over 880,000 active addresses and a total value locked (TVL) reported near $165 million, metrics used to signal robust on-chain engagement ahead of the governance vote. Additionally, more than 150 million FXRP tokens have been minted, with the majority allocated within decentralized finance applications on Flare.
Under the new proposal, the minimum gas fee on the network would rise from 60 gwei to 1,200 gwei. This is intended to increase the annual FLR token burn from 7.5 million to 300 million, aligning token supply reduction more closely with actual network usage and aiming to incentivize long-term participation.
Flare also plans to modify reward allocations, shifting a greater portion toward users staking through the P Chain, and ensures infrastructure providers receive at least 20% of fee-derived revenue for supporting the network’s activity.
The governance schedule announced by Flare sets a notice period for the proposal from April 9 to April 16, with the community voting slated between April 17 and April 24.
Should the proposal pass, adjustments to inflation and fee structures are expected to be enacted immediately. The transition to the new builder model for block creation, however, will be introduced incrementally as the network’s readiness allows.
Flare has clarified that integrated components such as FAssets, Smart Accounts, Data Connector, and Confidential Compute will be linked within the new framework, seeking to synchronize all aspects of the ecosystem with FLR’s revised economic model.
Flare was launched to offer secure, EVM-compatible smart contracts that leverage decentralized data in multi-chain environments. Its ambitions include creating new economic opportunities and data utility across partner protocols and developers.
