In a bid to become one of the first layer-1 blockchains to harness maximal extractable value (MEV) at the protocol level, Flare has introduced a governance proposal. This move would redirect MEV, currently benefiting a select few, back 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, effectively imposing a hidden tax on users. Estimates suggest that MEV revenues can reach tens of millions of dollars on certain networks, such as Arbitrum, and upwards of $500 million on Ethereum.
Flare's proposal outlines a three-stage process to capture this value, starting with the transition of block building from individual validators to a designated entity, followed by the integration of block building into Flare Confidential Compute for enhanced transparency, and finally, merging the builder and proposer roles. The proposal also introduces the Flare Income Reinvestment Entity (FIRE), tasked with collecting revenue from various protocol sources, including fees, and utilizing it to buy back and burn FLR tokens, thereby reducing the token supply. Upon approval, several changes would be implemented immediately, including a reduction in annual FLR inflation from 5% to 3%, a decrease in the hard cap from 5 billion to 3 billion tokens per year, and a significant increase in the base gas fee.
These adjustments are expected to substantially raise the estimated annual FLR burn, from approximately 7.5 million to 300 million, based on current transaction volumes. Notably, Flare has strong ties to the XRP ecosystem, having distributed its initial tokens through an airdrop to XRP holders and developed the FAssets system, which enables smart contract functionality for assets on non-native blockchains like XRPL.
As of late March 2026, the network boasts over $160 million in total value locked and more than 887,000 active addresses.