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, thereby redirecting revenue from external actors to its own token economy. This approach would make Flare one of the pioneering 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.
Currently, this value is largely absorbed by external searchers and builders, resulting in a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. According to external estimates, annual MEV revenues can reach tens of millions of dollars on networks like Arbitrum, upwards of $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal is divided into three stages, with the primary objective of integrating MEV revenue into the network's token economics.
The first stage involves transferring block building responsibilities from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback mechanism in place. The second stage introduces Flare Confidential Compute, making the block building process publicly auditable. The third stage merges the builder and proposer into a single entity, transitioning existing validators to a verification role. Additionally, the proposal establishes FIRE (Flare Income Reinvestment Entity), which will collect revenue from various protocol sources, including attestation fees, FAsset and Smart Account fees, confidential compute fees, and captured MEV.
FIRE's primary goal is to reduce the FLR token supply through open-market buybacks and burns. Upon approval, several changes will take effect immediately. The annual FLR inflation rate will decrease from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year.
A 20-fold 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 the increased gas fee, a standard Flare transaction would cost only 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.
Its 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 boasts over $160 million in total value locked, with more than 887,000 active addresses.