In a groundbreaking move, Flare has introduced a governance proposal that would enable the network to harness maximal extractable value (MEV) at the protocol level, rather than allowing it to accumulate among a select few specialized actors who currently profit from transaction ordering across 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. According to external estimates, annual MEV revenues reach tens of millions on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana.
Flare's proposal involves a three-stage process to redirect this revenue into the protocol's token economics. Initially, block building would be transferred from individual validators to a designated builder operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable.
The second stage would involve moving block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, shifting the role of existing validators to a verification capacity. The proposal also establishes the Flare Income Reinvestment Entity (FIRE), 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%, with the hard cap lowered to 3 billion tokens per year from 5 billion. A 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, would result in an estimated annual FLR burn of 300 million, up from approximately 7.5 million, at current transaction volumes. Notably, even with the increase, the cost of a standard Flare transaction would remain a fraction of a cent.
With its roots in the XRP ecosystem, having distributed its initial token supply through an airdrop to XRP holders in 2023, Flare's FAssets system has produced over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that lack native support. As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses.