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) directly within its protocol, rather than allowing it to benefit a limited number of specialized actors who currently profit from transaction ordering. This move is expected to significantly impact the blockchain's token economics and user experience. MEV refers to the revenue generated by reordering, inserting, or censoring transactions within a block, which on most blockchains, is captured by external searchers and builders, effectively imposing a hidden tax on regular users through practices like front-running, sandwich attacks, and arbitrage.
Estimates suggest that MEV revenues can be substantial, with tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and as high as $1 billion on Solana. The proposed three-stage plan by Flare aims to redirect this revenue back into the protocol. Initially, block building would be managed by a designated entity, with a fallback to the current validator model if needed. The process would then be made publicly auditable through Flare Confidential Compute.
Finally, the roles of the builder and proposer would be merged, with validators shifting to a verification role. A new entity, FIRE (Flare Income Reinvestment Entity), would be established to collect revenue from various protocol sources, including fees from attestations, FAssets, Smart Accounts, confidential computing, and captured MEV. FIRE's primary goal would be to reduce the supply of FLR tokens through open-market buybacks and burns. Upon approval, several changes would be implemented immediately, including a reduction in annual FLR inflation from 5% to 3%, and a decrease in the hard cap from 5 billion to 3 billion tokens per year.
The base gas fee would also increase 20-fold, from 60 gwei to 1,200 gwei, which 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. With its roots in the XRP ecosystem, having conducted an airdrop to XRP holders in 2023, Flare's FAssets system has enabled smart contract functionality for assets on non-native blockchains like XRPL, resulting in 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, indicating significant adoption and usage.