In a groundbreaking move, Flare has put forth a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, a first for a layer-1 blockchain. This approach would redirect MEV revenue from external actors to the network's token economics. MEV refers to the income 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 absorbed by external searchers and builders, resulting in significant revenue losses.
Estimates suggest that annual MEV revenues can reach tens of millions on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal involves a three-stage process to integrate MEV revenue into the network's token economics. Initially, block building would transition from individual validators to a designated builder operated by the Flare Entity, with a fallback to the current model if the builder becomes unavailable.
The second stage would involve the integration of block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge 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 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 reduce 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%, with the hard cap 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 the increase, the cost of a standard Flare transaction would remain a fraction of a cent. Flare's connection to the XRP ecosystem is noteworthy, having distributed its initial token supply through an airdrop to XRP holders in 2023. The network's FAssets system has produced over 150 million FXRP, bringing 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.