Flare has put forth a governance proposal that would enable the protocol to capture maximal extractable value (MEV) at the protocol level, a first among layer-1 blockchains. This move would redirect MEV from external actors who currently profit from transaction ordering on major chains.
MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, effectively imposing a hidden tax on users through practices like front-running and arbitrage. Estimates suggest that MEV revenues reach tens of millions of dollars on networks like Arbitrum, $500 million on Ethereum, and up to $1 billion on Solana. The proposal outlines a three-stage plan to integrate MEV into Flare's token economy. Initially, block building would be handled by a designated entity operated by the Flare Entity, with a fallback to the current model if needed.
The second stage involves moving block building to Flare Confidential Compute, making the process publicly auditable. The final stage merges the builder and proposer into a single entity, transitioning validators to a verification role. Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), which would collect revenue from various protocol sources, including fees, and use it to buy back and burn FLR tokens, thereby reducing the token supply.
Upon approval, several changes would take effect, including a reduction in annual FLR inflation from 5% to 3%, and a decrease in the hard cap from 5 billion to 3 billion tokens per year. The base gas fee would increase 20-fold, from 60 gwei to 1,200 gwei, which is expected to raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes.
Despite the increase, the cost of a standard Flare transaction would remain a fraction of a cent. With its roots in the XRP ecosystem, Flare distributed its initial token supply through an airdrop to XRP holders in 2023 and has developed the FAssets system, which has generated over 150 million FXRP and aims to bring smart contract functionality to assets on blockchains like XRPL that lack native support. As of late March 2026, the network reports over $160 million in total value locked and more than 887,000 active addresses.