In a groundbreaking move, Flare has put forth a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, a first for a layer-1 blockchain. This approach would redirect the revenue generated by MEV away from a select group of specialized actors and into the network's own token economy. MEV refers to the income that block builders generate by reordering, inserting, or censoring transactions within a block, effectively imposing a hidden tax on regular users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that MEV revenues can reach tens of millions of dollars on certain networks, with Ethereum and Solana potentially generating upwards of $500 million and $1 billion, respectively.
Flare's proposal is designed to channel this revenue into the network's token economics through a three-stage process. Initially, block building would be transferred from individual validators to a designated builder operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable. The second stage would involve moving block building to Flare Confidential Compute, making the process publicly auditable.
In the final stage, the builder and proposer would be merged into a single entity, transitioning existing validators to a verification role. 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 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%, a decrease in the hard cap from 5 billion to 3 billion tokens per year, and a 20-fold increase in the base gas fee from 60 gwei to 1,200 gwei. This increase is expected to raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes, with a standard Flare transaction costing only a fraction of a cent. With its roots in the XRP ecosystem, Flare has a history of innovation, having distributed its initial token supply through an airdrop to XRP holders in 2023.
The network's FAssets system has produced over 150 million FXRP, bringing 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.