In a groundbreaking move, Flare has unveiled a governance proposal that aims to capture maximal extractable value (MEV) at the protocol level, a first for a layer-1 blockchain. This approach would redirect MEV revenue, currently dominated by a select group of specialized actors, back into the protocol's token economy. MEV refers to the revenue generated by block builders through transaction reordering, insertion, or censorship, effectively imposing a hidden tax on users. By capturing MEV, Flare seeks to reduce the financial burden on its users.
The proposed three-stage plan would initially transition block building to a designated entity, followed by the integration of Flare Confidential Compute, and ultimately, the merger of the builder and proposer roles. A new entity, FIRE, would be established to oversee revenue collection from various protocol sources, including fees and captured MEV, with the primary objective of reducing the FLR token supply through buybacks and burns.
Upon approval, several changes would take effect, including a reduction in annual FLR inflation from 5% to 3%, a decreased hard cap, and a significant increase in the base gas fee. This increase would result in a substantial rise in estimated annual FLR burn, from approximately 7.5 million to 300 million, at current transaction volumes.
Notably, Flare has strong ties to the XRP ecosystem, having distributed its initial token supply to XRP holders in 2023. The network's FAssets system has successfully brought smart contract functionality to assets on non-native blockchains, such as XRPL, with over 150 million FXRP produced. As of late March 2026, the network boasts over $160 million in total value locked and more than 887,000 active addresses.