In a groundbreaking move, Flare has introduced a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, thereby redirecting revenue from a select group of specialized actors to the network itself. This approach would make Flare one of the pioneering layer-1 blockchains to achieve MEV capture.
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 ordinary users. According to external estimates, MEV revenues can reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. The proposed three-stage plan by Flare would channel this revenue into the network's token economics.
Initially, block building would transition 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 involves integrating block building into Flare Confidential Compute, making the process publicly auditable.
The final stage merges the builder and proposer into a single entity, shifting the role of existing validators to a verification capacity. Furthermore, 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.
The primary objective of FIRE is to decrease the FLR token supply through open-market buybacks and burns. Upon approval, several changes would take effect immediately. The annual FLR inflation rate would decrease to 3% from 5%, and the hard cap would be reduced to 3 billion tokens per year from 5 billion.
A significant increase to the base gas fee, from 60 gwei to 1,200 gwei, would result in a substantial rise in estimated annual FLR burn, from approximately 7.5 million to 300 million at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent. Flare's roots in the XRP ecosystem are significant, having distributed its initial token supply to XRP holders through an airdrop in 2023.
The FAssets system has successfully produced over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that lack native support. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the cryptocurrency landscape.