Flare’s FIP.16 plan would capture MEV at the base layer, slash FLR inflation to 3% and route new revenues through FIRE into buybacks and aggressive token burns.

Flare has tabled a sweeping governance proposal that would make it one of the first layer-1s to capture maximal extractable value (MEV) directly at the protocol level while cutting annual FLR inflation by 40% to 3%.

In its FIP.16 proposal, the Flare Foundation said the model is designed so that “network usage directly connects to token value,” with MEV and other fees routed into FLR buybacks and burns instead of going to external searchers and private builders.

Under the three-stage redesign, block building would first shift from individual validators to a designated builder run by the Flare Entity, then move into Flare Confidential Compute for public auditability, before finally merging builder and proposer roles and relegating existing validators to verification.

The proposal creates the Flare Income Reinvestment Entity (FIRE), which will “collect revenue from multiple protocol sources including attestation fees, FAsset and Smart Account fees, confidential compute fees and the captured MEV,” before using it to buy and burn FLR on the open market.

If approved, FIP.16 would immediately drop FLR inflation from 5% to 3% and lower the annual issuance cap from 5 billion to 3 billion tokens, a move Binance Square summarized as “a 40% decrease” in the network’s inflation rate.

Flare also plans a 20-fold jump in its base gas fee, from 60 gwei to 1,200 gwei, a change various analyses estimate would lift annual FLR burns from roughly 7.5 million tokens to about 300 million at current activity, even as a typical transaction “would cost a fraction of a cent.”

According to CoinDesk, the network is pitching protocol-level MEV capture as a way to claw back what it calls “a hidden tax on ordinary users” and recycle it into long-term token value instead of allowing front‑running and sandwich bots to hoard the upside.

Flare’s tokenomics overhaul lands as the network reports more than $160 million in total value locked, over 880,000 active addresses and around 150 million FXRP minted to bring smart contracts to XRP, with its initial FLR distribution having gone to XRP holders in 2023.

As of April 17, 2026, XRP is trading around $1.47, while FLR changes hands near $0.009, underscoring the smaller network’s bet that tighter inflation and protocol-owned MEV can help close the value gap with larger ecosystems anchored by assets like XRP.

In the broader market, the move echoes debates on Ethereum and other chains over whether MEV should remain the domain of specialized actors or be socialized via mechanisms such as protocol-owned builders and burn‑linked fee designs, a question Flare now wants token holders to settle in its upcoming FIP.16 vote.