In a groundbreaking move, Flare has put forth a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level. This approach would redirect revenue from a select group of specialized actors who capitalize on transaction ordering across major chains, to the protocol itself. 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 practices like front-running, sandwich attacks, and arbitrage.
Estimates suggest that MEV revenues reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal outlines a three-stage plan to integrate MEV revenue into its token economics. Initially, block building would be transferred from individual validators to a designated builder operated by the Flare Entity, with a fallback to the current model if the builder becomes unavailable. The second stage involves moving block building into Flare Confidential Compute, making the process publicly auditable.
The final stage merges the builder and proposer into a single entity, reassigning existing validators to a verification role. The proposal also introduces FIRE, the Flare Income Reinvestment Entity, tasked with collecting 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.
The annual FLR inflation rate would be reduced to 3% from 5%, with the hard cap lowered to 3 billion tokens per year from 5 billion. A significant increase to 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 this increase, the cost of a standard Flare transaction would remain a fraction of a cent. With its roots in the XRP ecosystem, Flare has a history of innovation, including the distribution of its initial token supply through an airdrop to XRP holders in 2023.
Its FAssets system has successfully brought smart contract functionality to assets on blockchains like XRPL, producing over 150 million FXRP. As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the blockchain landscape.