Flare Network, an EVM-compatible Layer 1 blockchain focused on providing decentralized access to data from other chains and the internet, opened its FIP.16 governance vote today, April 17. FLR token holders have until April 24 to decide whether the network undergoes a full-scale economic restructuring. The proposal needs a simple majority to pass.
The Flare Foundation, the entity responsible for the development of the Flare Network, first published FIP.16 on March 27. It went through a notice period from April 9 to April 16 before going live for voting this morning.
Why the proposal exists
Earlier upgrades to FAssets, a protocol on Flare that allows tokens from blockchains without smart contract support (like XRP) to be used in DeFi through trustless representations such as FXRP, made the system safer and more capital-efficient through stablecoin collateral and the Core Vault. But those improvements unintentionally weakened FLR’s economic role. Usage grew, but the token did not capture that growth. FIP.16 is designed to reconnect FLR to on-chain activity.
What changes if FIP.16 passes
Annual inflation drops from 5% to 3% immediately. The hard cap on yearly issuance also falls from 5 billion FLR to 3 billion. On the current inflatable supply of roughly 86 billion FLR, that brings gross inflation to about 2.58 billion tokens per year.
Base transaction fees would increase 20x, from 25 gwei to 500 gwei. Even after this increase, a standard Flare transaction would cost about $0.00008. The Foundation estimates this would push annual FLR burns from roughly 7.5 million to around 300 million at current network activity, with all burned FLR permanently removed from circulation.
The proposal also creates FIRE, the Flare Income Reinvestment Entity, a new umbrella entity that would collect revenues from four sources: FDC (Flare Data Connector) attestation fees, FAssets and Flare Smart Accounts protocol fees, Flare Confidential Compute (FCC) charges, and captured MEV. FIRE’s primary mandate is to use these funds, which would include FLR, stablecoins, FXRP, and wrapped ETH, for open-market FLR buybacks and burns.
MEV capture at the protocol level
The biggest element here is MEV, or Maximal Extractable Value, the profit that block builders extract by reordering transactions. On most chains, this flows to external searchers. Flare’s proposal would internalize it through a three-stage block building overhaul, starting with a single FIRE-designated builder (initially the Foundation itself), progressing to confidential compute-based block building, and eventually merging the builder and proposer roles entirely.
The proposal also rebalances rewards, giving P-chain stakers a 5x weight multiplier over C-chain delegators, and enforces a minimum 20% fee for infrastructure providers network-wide.
What to watch
FIRE will initially be administered by the Foundation, but the community can vote after one year to move it into joint governance, requiring 50% of the inflatable FLR supply to approve. If triggered, representatives would be elected through a dual-network process involving both Songbird (Flare’s canary network) and Flare itself.
FLR is currently trading around $0.0082 with a market cap of approximately $700 million, down roughly 94% from its all-time high. The network reports over $160 million in TVL and more than 880,000 active addresses. The vote closes April 24.
Also Read: Litecoin LiteForge Testnet Goes Live with Smart Contract Support
