In a groundbreaking move, Flare has introduced 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 redirect MEV revenue, currently enjoyed by a select few specialized actors, into the protocol's token economy. MEV refers to the revenue generated by block builders through transaction reordering, insertion, or censorship within a block, often resulting in a hidden tax on ordinary users. On major chains like Arbitrum, Ethereum, and Solana, external estimates suggest annual MEV revenues range from tens of millions to over $1 billion.
Flare's proposal involves a three-stage process to integrate MEV into its token economics. Initially, block building would transition from individual validators to a designated entity operated by Flare, with a fallback option to the current model if needed.
The second stage would involve moving block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, shifting validators to a verification role. The proposal also establishes the Flare Income Reinvestment Entity (FIRE) to 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 reduce the FLR token supply through open-market buybacks and burns.
Upon approval, several changes would take effect immediately, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreasing from 5 billion to 3 billion tokens per year. Additionally, 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 the increased gas fee, a standard Flare transaction would still cost only a fraction of a cent. As a network with roots in the XRP ecosystem, Flare has distributed its initial token supply through an airdrop to XRP holders in 2023 and has developed the FAssets system, which has produced over 150 million FXRP, enabling smart contract functionality for 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.