In a bid to redefine the blockchain landscape, Flare has unveiled a governance proposal that seeks to capture maximal extractable value (MEV) at the protocol level, a move that would set it apart from other layer-1 blockchains. This innovative approach would redirect MEV, currently dominated by a select group of actors, back into the protocol's ecosystem. MEV refers to the revenue generated by block builders through the strategic ordering, insertion, or censorship of transactions within a block, essentially imposing a hidden tax on users.
Estimates suggest that MEV revenues reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal outlines a three-stage plan to integrate MEV into its token economics.
Initially, block building would transition from individual validators to a designated entity operated by Flare, with a provision to revert to the current model if needed. The second stage involves moving block building into Flare Confidential Compute, ensuring the process is publicly auditable. The final stage merges the builder and proposer roles, reassigning validators to a verification capacity. Furthermore, the proposal introduces FIRE (Flare Income Reinvestment Entity), tasked with collecting revenue from various protocol sources, including fees from attestation, FAsset, Smart Accounts, confidential compute, and captured MEV.
FIRE's primary objective is to reduce the FLR token supply through strategic buybacks and burns on the open market. Upon approval, several key changes would be implemented immediately. The annual FLR inflation rate would decrease from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year.
A significant increase in the base gas fee, from 60 gwei to 1,200 gwei, is expected to raise the estimated annual FLR burn from approximately 7.5 million to 300 million, based on current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent. With its roots deeply embedded in the XRP ecosystem, Flare has previously distributed its initial token supply via an airdrop to XRP holders.
Its FAssets system, designed to bring smart contract functionality to assets on non-native blockchains like XRPL, has yielded over 150 million FXRP. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the blockchain space.