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 revenue from MEV, currently profited by a select few, back into the network's token economy. 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.
By routing MEV revenue into the protocol's token economics, Flare's proposal would significantly impact the network's overall revenue structure. External estimates suggest that annual MEV revenues can range from tens of millions on networks like Arbitrum to upwards of $500 million on Ethereum and $1 billion on Solana. The proposed three-stage plan would initially transfer block building to a designated entity operated by the Flare Entity, with a fallback to the current model if the builder is unavailable.
The second stage would integrate block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, reassigning existing validators to a verification role.
Additionally, the proposal 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, 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 increase 20-fold, from 60 gwei to 1,200 gwei, resulting in an estimated annual FLR burn of 300 million, up from roughly 7.5 million, at current transaction volumes. Despite the increase, the cost of a standard Flare transaction would remain a fraction of a cent. With its roots in the XRP ecosystem, Flare has established a significant presence, 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, 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 reported over $160 million in total value locked, with more than 887,000 active addresses.