On Thursday, Flare announced a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, a first among layer-1 blockchains. This move would redirect revenue from MEV, currently benefiting a select few specialized actors, to the network's token economy. MEV refers to the revenue generated by block builders through reordering, inserting, or censoring transactions within a block, often resulting in a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. Estimates suggest that MEV revenues can reach tens of millions on certain networks, upwards of $500 million on Ethereum, and as high as $1 billion on Solana.
The proposed three-stage plan would integrate MEV revenue into Flare's token economics. Initially, block building would be transferred 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 would involve moving block building to Flare Confidential Compute, making the process publicly auditable. In the final stage, the builder and proposer would be merged into a single entity, transitioning existing validators to a verification role.
The proposal also 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. FIRE's primary objective 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 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. Despite this increase, the cost of a standard Flare transaction would remain 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. Its FAssets system has produced over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it. As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses.