In a groundbreaking move, Flare has put forth a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level. This approach would divert MEV away from a select group of specialized actors who currently profit from manipulating transaction ordering across various major chains.
Instead, the value would be channeled into the protocol's token economy. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block. On most blockchains, this value is absorbed by external searchers and builders, effectively imposing a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues can reach tens of millions of dollars on networks like Arbitrum, upwards of $500 million on Ethereum, and as high as $1 billion on Solana.
The proposed three-stage plan by Flare would redirect this revenue into its own token economics. The first stage involves transferring block building from individual validators to a designated builder, initially managed by the Flare Entity, with a fallback to the current model if the builder becomes unavailable.
The second stage transitions block building into Flare Confidential Compute, making the process publicly auditable. The third stage merges the builder and proposer into a single entity, shifting the role of existing validators to a verification capacity. Additionally, the proposal introduces FIRE, the Flare Income Reinvestment Entity, which would collect revenue from various protocol sources, including attestation fees, FAsset and Smart Account fees, confidential compute fees, and the captured MEV.
FIRE's primary objective is to reduce the FLR token supply through open-market buybacks and burns. Several key changes would be implemented immediately upon approval, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreased to 3 billion tokens per year from 5 billion. Furthermore, a 20-fold 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 at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent.
Flare's connection to the XRP ecosystem is significant, having distributed its initial token supply through an airdrop to XRP holders in 2023. Its FAssets system has produced over 150 million FXRP and is designed to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it.
As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses.