In a groundbreaking move, Flare has introduced 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, currently dominated by a select group of specialized actors, back into the protocol's token economics.
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 users. Estimates suggest that MEV revenues reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana.
Flare's proposal is designed to harness this value. The three-stage plan begins with the transfer of block building responsibilities from individual validators to a designated entity, initially managed by the Flare Entity, with a fallback mechanism in place.
The second stage integrates block building into Flare Confidential Compute, ensuring public auditability. The final stage merges the builder and proposer into a single entity, transitioning validators to a verification role. Additionally, the proposal introduces FIRE (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 open-market buybacks and burns. Upon approval, several changes would take effect immediately. The annual FLR inflation rate would decrease from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year.
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.
Flare's connection to the XRP ecosystem is rooted in its initial token distribution via an airdrop to XRP holders in 2023. The network's FAssets system has successfully introduced smart contract functionality to assets on blockchains like XRPL, producing over 150 million FXRP.
As of late March 2026, Flare reports a total value locked of over $160 million, with more than 887,000 active addresses, underscoring the network's growing presence and potential for further expansion.