In a recent governance proposal, Flare has outlined a plan to become one of the first layer-1 blockchains to capture maximal extractable value (MEV) at the protocol level, rather than allowing it to benefit a select few specialized actors who profit from transaction ordering. 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. On most blockchains, this value is captured by external searchers and builders, resulting in significant revenue, with estimates suggesting tens of millions of dollars on networks like Arbitrum, $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal involves a three-stage process to redirect MEV revenue into the protocol's token economics.
The first stage involves transferring block building from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback to the current model if the builder is unavailable. The second stage moves block building to Flare Confidential Compute, making the process publicly auditable. The third stage merges the builder and proposer into a single entity, shifting existing validators to a verification role.
The proposal also introduces FIRE, the Flare Income Reinvestment Entity, which will 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 will 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. Flare has strong ties to the XRP ecosystem, having distributed its initial token supply through an airdrop to XRP holders in 2023, and its FAssets system has produced over 150 million FXRP, enabling smart contract functionality for assets on blockchains like XRPL. As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses.