In a recent governance proposal, Flare suggests becoming one of the first layer-1 blockchains to incorporate maximal extractable value (MEV) capture at the protocol level. This move would redirect revenue from MEV, currently benefiting a select group of specialized actors, back into the protocol's token economy. MEV refers to the income generated by block builders through the reordering, insertion, or censorship of transactions within a block.
On most blockchain networks, this value is captured by external searchers and builders, resulting in a hidden tax on regular users due to front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues range from tens of millions on networks like Arbitrum to over $500 million on Ethereum and up to $1 billion on Solana. Flare's proposal involves a three-stage process to integrate MEV revenue into its token economics. The first stage involves transferring block building from individual validators to a designated builder operated by the Flare Entity, with a fallback to the current model if the builder becomes unavailable.
The second stage transitions block building to 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. The proposal also introduces FIRE, the Flare Income Reinvestment Entity, which will collect revenue from various protocol sources, including attestation fees, FAsset and Smart Account fees, confidential compute fees, and captured MEV.
FIRE's primary objective is to decrease the FLR token supply through open-market buybacks and burns. Upon approval, several changes will take effect immediately. The annual FLR inflation rate will decrease to 3% from 5%, and the hard cap will be reduced to 3 billion tokens per year from 5 billion.
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. Even with the increase, the cost of a standard Flare transaction will remain a fraction of a cent.
With its roots in the XRP ecosystem, Flare has 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.