Flare Network Cuts Inflation Rate, Raises Fees in Major Upgrade

The Flare Network has implemented a major upgrade, FIP.16, which aims to shift its economic model away from relying on token inflation for network security. The proposal was passed by governance vote in April 2026 and includes several key changes, including reducing the annual FLR inflation rate from 5% to 3%, raising the minimum base transaction fee twentyfold, and creating a new entity called FIRE (Flare Income Reinvestment Entity) to collect revenue generated by network activity.

The reduced inflation rate will result in fewer new tokens being issued each year, while the increased fees will generate more revenue for the network. This revenue will be used to buy back FLR on the open market and permanently burn it, removing it from circulation. According to projections, this mechanism could remove around 300 million FLR from circulation each year.

The upgrade also introduced a new protocol revenue pool, which will collect fees generated by FAssets, Flare's system for bringing assets like XRP onto the network, as well as MEV (maximal extractable value) captured from transaction ordering. These fees will be used to fund rewards for validators and data providers who run Flare's Time Series Oracle (FTSO) and Flare Data Connector (FDC).