Flare (FLR) is an innovative cryptocurrency project that has developed a full-stack layer-1 network specifically for data-intensive applications. The company also issues ‘FAssets’, which transform non-smart contract-enabled cryptocurrencies, like XRP, to ERC-20 representations (for example, FXRP), which people can use in Decentralized Finance (DeFi).
Maximal Extractable Value, or MEV, is a concept in cryptocurrency that represents the maximum profit that network participants (miners, stakers, validators, etc.) can extract by strategically managing how transactions in a block are recorded and ordered.
Unfortunately, most blockchains direct MEV to a small number of external third-party participants. However, Flare’s new FIP.16 proposal, created on March 27, 2026, could dramatically alter the network’s infrastructure, enabling it to internalize the value that would usually leak out of the Flare ecosystem, resulting in a stronger network economy.
Why is MEV a Big Deal?
In current blockchain systems, block builders are typically third-party entities focused on generating profit rather than improving the network on which they operate. As a result, legitimate MEV activities, such as cross-chain arbitrage, are overshadowed by exploitative practices, including transaction frontrunning, where bots maliciously hijack trading opportunities.
Hacken reported that MEV frontrunner bots have captured at least $1 billion in profit between June 2020 and 2025. Flare’s proposal assigns block-building responsibilities to designated builders, restricted to positive MEV activities, thereby redirecting this lost revenue from external third parties back into the Flare ecosystem.
Hugo Philion, the co-founder and CEO of Flare, had this to say about the importance of MEV:
“MEV is one of the largest unpriced revenue streams in crypto, and on nearly every chain it flows to a handful of specialized searchers rather than back to the network. We are proposing to change that for Flare. The protocol itself becomes the block builder, captures network-positive MEV, and directs the proceeds toward reducing FLR supply. This is not simply a tokenomics refresh. It is an architectural decision about who benefits from the activity running through the system.”
Flare FIP.16
The Flare Foundation proposed Flare’s infrastructure changes in FIP.16, following a period of significant growth. As of late March 2026, the Flare Network has over $160 million in Total Value Locked (TLV), 887,000 active addresses, and upwards of 150 million FXRP minted.
The proposal will create the Flare Income Reinvestment Entity (FIRE), which will collect and allocate revenue from multiple sources, including captured MEV, FAsset, and Smart Account protocol fees, Flare Confidential Compute fees, and FDC attestation fees. The primary goal of FIRE will be to reduce the FLR token supply through buybacks and burns.
The FIP.16 proposal outlines a three-stage roadmap to moving block building to system-owned control. Flare has taken a multi-stage approach to ensure that each stage of the upgrade is tested, stable, and secure before progressing to the next.
- Stage 1 (Fire Builder): The first upgrade will introduce protocol-level MEV capture by assigning a designated block builder (initially FEL), moving away from the current system.
- Stage 2 (Flare Confidential Compute): The second upgrade will move block building to Flare Confidential Compute, transitioning it to a publicly viewable, auditable system that vastly enhances transparency.
- Stage 3 (Unified Builder): The final upgrade will see Flare merge the builder and proposer roles into a single, unified entity. Current validator nodes will shift to a verification role.
If FIP.16 is successfully implemented (requiring 50% approval), there will be immediate and significant changes to the Flare network. It will slash annual FLR inflation from 5% to 3% and cap the issuance of new FLR tokens to 3 billion annually, down from 5 billion.
Transaction fees will also increase twentyfold, from 60 gwei to 1,200 gwei, but transaction costs should remain a fraction of a cent. However, the additional revenue will enable Flare to increase the FLR burn rate from around 7.5 million to roughly 300 million tokens.
Looking Forward
The FIP.16 proposal could significantly strengthen Flare’s tokenomics and price action, while enhancing security, transparency, and participation. Both FLR investors and people who regularly transact on the Flare network will benefit from the upgrade, making it particularly attractive.
FIRE’s aim of reducing the FLR token supply as much as possible, the hard cap on newly issued tokens, and the lower inflation rate will combine with the buybacks and token burns generated from Flare’s increased fees to generate positive price action and reward existing holders.
While the proposal promises to enhance many aspects of the Flare Network, it requires a majority vote for implementation, which is a significant hurdle. If you’re an FLR investor or a Flare enthusiast, it’s worth keeping an eye on the proposal, as it could have a major impact on the network if successful.
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With over half a decade of experience commentating on the cryptocurrency market and even more as a trader and investor, Jay has developed a robust knowledge base that enables him to dive deep into the inner workings of crypto platforms and the broader market to deliver unique, user-focused insight.
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