In a bid to revolutionize its blockchain, Flare has unveiled a governance proposal that would enable it to capture maximal extractable value (MEV) at the protocol level, a move that would set it apart from other layer-1 blockchains. 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 income generated by block builders through the strategic reordering, insertion, or censorship of transactions within a block, effectively imposing a hidden tax on ordinary users.
Estimates suggest that MEV revenues can reach tens of millions of dollars on certain networks and exceed $1 billion on others. Flare's proposal is structured into three stages, aiming to integrate MEV capture into its token economics. Initially, block building would transition from individual validators to a designated entity, with the possibility of reverting to the current model if needed. The process would then become publicly auditable through Flare Confidential Compute, culminating in the merger of the builder and proposer roles, thereby shifting validators to a verification capacity.
A key component of the proposal is the introduction of FIRE, the Flare Income Reinvestment Entity, tasked with collecting revenue from various protocol sources, including fees from attestation, FAsset, Smart Accounts, confidential computing, and captured MEV. FIRE's primary objective is to reduce the FLR token supply through strategic buybacks and burns on the open market.
Upon approval, several changes would be implemented immediately, including a reduction in annual FLR inflation from 5% to 3%, and a decrease in the hard cap from 5 billion to 3 billion tokens per year. Furthermore, a significant 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, based on 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, having conducted an airdrop to XRP holders in 2023, Flare's FAssets system has been successful in bringing smart contract functionality to assets on blockchains that lack native support, such as XRPL, resulting in the creation of over 150 million FXRP. 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 blockchain landscape.