Flare proposes FLR tokenomics overhaul with MEV capture and inflation reduction

Flare has proposed an overhaul of FLR tokenomics, combining a reduction in inflation with a new MEV capture framework and a FIRE revenue model intended to support ecosystem growth.

Tokenomics changes: lower inflation and reduced issuance

Under the proposal, Flare would reduce annual FLR inflation from 5% to 3%, cutting issuance by 40%. It also plans to lower the yearly cap from 5 billion to 3 billion FLR tokens.

Flare introduced FIRE, or Flare Income Reinvestment Entity, to manage captured value. The framework is designed to channel proceeds into buybacks, burns, and ecosystem funding.

Flare said the model aims to connect network usage directly to token value, aligning onchain activity with FLR demand.

MEV capture and a protocol-controlled builder approach

The proposal shifts block building toward a protocol-controlled structure over time, targeting value flows that typically go to external searchers. Flare also plans to capture positive MEV, including arbitrage and liquidation events, and includes liquidity provisioning within the builder framework.

Flare said the change is intended to improve long-term token sustainability through structured revenue capture and to reduce inefficiencies seen across many blockchain systems.

Network activity and onchain metrics cited by Flare

Flare reported more than $160 million in total value locked across its ecosystem and recorded more than 880,000 active addresses.

The network confirmed around 150 million FXRP minted, with over 85% deployed in DeFi use. Dune data cited in the proposal places TVL near $165 million.

Fee and burn mechanics: gas fee increase and burn target

The proposal includes a gas fee increase from 60 gwei to 1,200 gwei. Flare said this adjustment is intended to raise the annual FLR burn from 7.5 million to 300 million tokens.

Flare stated that higher fees could strengthen burn mechanics under current transaction levels and improve the linkage between usage and token supply reduction.

Staking and fee sharing: reward allocation and infrastructure contribution

The plan shifts reward allocation toward P Chain staking participants. It also sets a minimum 20% fee share for infrastructure contributors.

Flare said this structure supports entities maintaining network services by ensuring a defined share of generated revenue flows to operators.

Governance timeline and implementation path

Flare scheduled the governance notice period from April 9 to April 16, followed by voting from April 17 to April 24.

The proposal outlines immediate implementation for key economic changes upon approval, including inflation cuts and fee structure adjustments. Flare also said the builder model will roll out gradually over time, depending on governance approval and network readiness.

Integration across network components

The proposal connects multiple network components, including FAssets and Smart Accounts, and integrates Flare Data Connector and Confidential Compute.

Flare said the next phase links ecosystem activity directly to FLR economics, and that voting will determine the proposal outcome.