On Thursday, Flare announced 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 move would redirect revenue from a select group of specialized actors who currently profit from transaction ordering on major chains.
MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, effectively imposing a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues range from tens of millions on networks like Arbitrum to $500 million on Ethereum and $1 billion on Solana.
The proposed three-stage plan would integrate this revenue into Flare's token economics. The first stage involves transferring block building from individual validators to a designated builder operated by the Flare Entity, with a fallback option to the current model if the builder is unavailable. The second stage moves block building to Flare Confidential Compute, making the process publicly auditable.
The third stage merges the builder and proposer into a single entity, shifting 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 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 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. Even with this increase, a standard Flare transaction would cost only a fraction of a cent. As a network with deep roots in the XRP ecosystem, Flare has distributed its initial token supply through an airdrop to XRP holders in 2023.
Its FAssets system has generated over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it. The network reports over $160 million in total value locked as of late March 2026, with more than 887,000 active addresses.