Behind the monthly increase of Flare tokens exceeding 100%: updating token economics and increasing investment in ecological construction

Layer1 Blockchain Flare token has been on the rise recently, with an increase of more than 100%. Flare unveiled an updated token economic model on February 23 and announced agreements with early backers such as Kenetic and Aves Lair. Under the agreement, backers voluntarily extended the token freeze period until the first quarter of 2026 and agreed to limit the number of tokens sold to 0.5% of the average daily trading volume over a 30-day period.

To promote the continued growth of the ecosystem and incentivize builders, backers have pledged to reinvest at least 50% of token sale proceeds into Flare ecosystem projects over the next two years. Based on current market valuations, this reinvestment could reach $47 million, helping to reduce excess liquidity in the native token FLR, increase capital inflows to the Flare DeFi protocol, and inject new investment into Flare ecosystem projects.

Flare’s latest token economics

As early as December 2020, Flare completed an airdrop snapshot for Ripple holders. At that time, Flare gained great popularity thanks to the good news that major crypto exchanges such as Binance and Upbit supported airdrops, as well as the strong support from the Ripple community. However, as Flare gradually expands the scale of the project, Flare is no longer limited to serving a single community with a single utility. Instead, it builds the only smart contract platform that optimizes decentralized data acquisition to meet the needs of 70% to 90% % of the demand for blockchain data application cases, adding new possibilities to the blockchain. In November 2022, while releasing Token Economics, Flare proposed FIP.01 (Flare Improvement Proposal) and determined the token distribution date.

The FIP.01 proposal aims to reduce the token inflation rate and make contributors to the Flare network more incentivized. According to the FIP.01 proposal, the initial FLR distribution method remains unchanged. The public issuance of 28,524,921,372 tokens FLR is divided into two parts, of which 15% (i.e. 4,278,738,206) will be immediately distributed to airdrop recipients, leaving 85% of the total tokens. The amount is distributed in the form of FlareDrop over 36 months.

Today, early investors in Flare have signed a series of binding agreements that impose restrictions on token vesting and sales:

• Extension of token vesting: Backers The same number of FLR will be obtained as before, that is, 2,107,867,284.31 FLR. Among them, 813,870,745.01 FLR will be distributed in February. Early investors voluntarily extended the token vesting period from 2024 to the first quarter of 2026, which eased market selling pressure. Linking the interests of early supporters to the development of the ecological network will help encourage users to participate in the ecological network for a long time.
• FLR Sell Limit: Early investors commit to limit FLR sales to no more than 0.5% of daily trading volume (based on average trading volume over the past 30 days). This helps provide transparency and reduce market volatility.
• FLR Ecosystem Reinvestment: Through January 2026, 50% of all proceeds from investors selling FLR will be reinvested in the Flare ecosystem through applications, DeFi, TVL and liquidity provision to support The most critical value accumulation mechanism.
• Accountability: Investors agree to comprehensive programmatic oversight and accountability for compliance with mission and commitments.

By implementing the above measures, early investors will still receive the originally agreed-upon 2% of Flare token supply, but the upfront allocation will be reduced by 68% and the vesting period will be significantly extended. This move communicates to builders and token holders how the founding team aligns its interests with the community and supports the Flare network’s vision in a responsible manner. This kind of transparent and responsible behavior not only helps strengthen community trust, but also helps build a robust ecosystem, allowing the Flare network to better develop and grow.

Additionally, 50% of the proceeds from any token sale will be reinvested to support various Flare ecosystem projects, including:

• Loan Agreement
• DEX
This reinvestment and investor support plan builds on the announcement in October 2023, when another group of supporters agreed to burn approximately 2.1 billion FLR out of the initial 3.2 billion FLR allocation. As of now, about 400 million FLRs have been destroyed, and 66 million FLRs will be destroyed every month until the end of January 2026. Currently, all Flare backers will receive a total of 3,100,8111,195 FLR, which is slightly more than 3% of the total initial supply of FLR.
• With an agreement with early supporters, the founding team will be more closely tied to the development of the project by extending the token vesting period, limiting token sales, and promising to reinvest proceeds into the Flare ecosystem. This will not only make the token price more stable and the market more transparent, but also increase the community's confidence in the project, encourage users to participate in the ecological network for a long time, and is conducive to the long-term construction and development of the project.

• Continue to expand the functionality and utility of the Flare network

  The growth of the blockchain industry is limited by insufficient access to reliable off-chain data, and existing oracle systems are not sufficient to support some more complex use cases . Emerging applications require a highly scalable, low-cost, decentralized and low-latency solution, and Flare was born.

  Flare is committed to becoming an EVM smart contract platform that supports next-generation decentralized applications such as RWA tokenization and machine learning/AI. The Flare ecosystem currently has over 150 partners and builders, including Kinetic, XDFi, Pangolin, BlazeSwap, Uppercent, Covalent, SubQuery, Atriv, aiPX, Punk Domains, Ankr, Arkham, Flarescan, Subsquid, Web3Auth, Etherspot and Elliptic. These companies are actively involved in multiple fields such as NFT, DeFi, and the Metaverse, and provide Flare developers with the necessary tools to build Flare into a developer-friendly platform to support further construction and innovation.

  In 2023, Flare experienced important moments such as the token distribution event, listing on major exchanges, and the approval of Flare Improvement Proposal 1 (FIP.01) by voting, and made significant progress in governance. Currently, Flare has 435,000 wallets, more than 10,000 frequent active users, and more than 5 million token holders. 3 billion FLR are pledged to 82 validators, and a total of 76% of the FLR supply is packaged, delegated or pledged to actively participate in the Flare ecosystem.

  As we move into 2024, Flare will see the launch of all planned protocols and expand the functionality and utility of the Flare network. The Time Series Oracle (FTSO) extension will support 1,000 price and data series, possibly with single block updates. Flare data connectors (including state connectors and web connectors) allow smart contracts to access data from external sources and pass it to other chains, which provides the possibility for the community and data providers to earn revenue from other chains. The interoperability application product FAssets has been privately tested on Coston. It will iterate based on Coston’s learning results and be launched first on Songbird and then on the mainnet. The bridging protocol LayerCake opens the door for Flare to all the value within other smart contract systems.

  The design of token economics is for the long-term development of the Flare ecosystem, and no matter how excellent the design of token economics is, it ultimately comes down to the product itself. If the product does not gain enough user base, it will be difficult for the project to survive in the fierce competition. Flare has a solid foundation in technology construction. The system protocol FSP will enable better integration of Flare and Songbird with the network layer, the FAsset function ensures the liquidity and utility expansion of non-smart contract chains, while the stability of the decentralized oracle FTSO and the security of the cross-chain bridge LayerCake It also adds weight to Flare's success.

  As a Layer 1 public chain that provides multi-chain solutions, when the community foundation develops in the right narrative direction and early supporters commit to increase investment in the Flare ecosystem, the Flare ecosystem will continue to build and innovate , Flare’s future deserves high hopes.

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