Flare Proposes Aggressive Tokenomics Shift via MEV Capture and Inflation Cut

Flare is seeking to become one of the first layer-1 blockchains to capture Maximal Extractable Value (MEV) at the protocol level. By redirecting revenue that typically flows to external searchers and builders—who often profit from transaction reordering and front-running—the network intends to integrate these gains directly into its own economic model. The proposal outlines a three-stage transition. Initially, block building will shift to a designated builder managed by the Flare Entity. This will eventually move into Flare Confidential Compute for public auditability, and finally merge the builder and proposer roles into a single entity, shifting validators to a verification role. To manage these funds, the network will establish the Flare Income Reinvestment Entity (FIRE). This entity will collect MEV and various protocol fees, including attestation and Smart Account fees, to fund open-market buybacks and burns of the FLR token. Immediate changes upon approval include reducing annual inflation from 5% to 3% and lowering the annual hard cap from 5 billion to 3 billion tokens. Additionally, a 20-fold increase in the base gas fee—from 60 gwei to 1,200 gwei—is proposed. This adjustment is expected to increase the annual FLR burn from approximately 7.5 million to 300 million tokens, based on current transaction volumes. With over $160 million in total value locked and 887,000 active addresses as of March 2026, Flare continues to leverage its deep ties to the XRP ecosystem. The move signals a strategic shift toward a more deflationary pressure model to attract long-term holders.