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 significant departure from the current model where MEV is controlled by a select group of actors. This change would make Flare one of the first layer-1 blockchains to achieve this feat. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, essentially imposing a hidden tax on users.
On most blockchains, this value is appropriated by external searchers and builders, resulting in significant revenue losses for the network. Estimates suggest that annual MEV revenues can range from tens of millions on networks like Arbitrum to over $1 billion on Solana. Flare's proposal outlines a three-stage process to redirect MEV revenue into the network's token economics.
The first stage involves transitioning block building from individual validators to a designated builder operated by the Flare Entity, with a fallback mechanism in place. The second stage would move block building into Flare Confidential Compute, ensuring public auditability. The third stage would merge the builder and proposer into a single entity, redefining the role of existing validators to focus on verification. 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%, and the hard cap would be reduced to 3 billion tokens per year from 5 billion.
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 at current transaction volumes. Notably, even with 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.
The network's FAssets system has successfully brought smart contract functionality to assets on blockchains like XRPL, producing over 150 million FXRP. As of late March 2026, the network reported over $160 million in total value locked, with more than 887,000 active addresses, demonstrating its growing presence in the blockchain landscape.