In a groundbreaking move, Flare has unveiled a governance proposal to become one of the first layer-1 blockchains to capture maximal extractable value (MEV) at the protocol level, thereby reducing the control of external actors over transaction ordering and associated revenue. This approach would redirect MEV into the network's own token economy.
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 users. Current estimates suggest that MEV revenues can reach tens of millions of dollars on certain networks, such as Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. The proposed three-stage plan by Flare aims to integrate this revenue 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, enhancing public auditability. The final stage would merge the builder and proposer into a single entity, reassigning existing validators to a verification role.
Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), which would collect revenue from various protocol sources, including fees from attestation, FAsset, Smart Accounts, confidential computing, and captured MEV. The primary objective of FIRE 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%, capping the hard limit at 3 billion tokens per year, down from 5 billion. The base gas fee would increase 20-fold, from 60 gwei to 1,200 gwei, potentially raising the 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. With its roots deeply embedded in the XRP ecosystem, Flare has previously distributed its initial token supply to XRP holders through an airdrop in 2023.
Its FAssets system is designed to bring smart contract functionality to assets on blockchains like XRPL, which do not natively support it, and has produced over 150 million FXRP. As of late March 2026, the network reported over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the blockchain landscape.