On Thursday, Flare introduced a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level, rather than allowing it to benefit a select few specialized actors who profit from transaction ordering across major chains. MEV refers to the revenue generated by block builders when they reorder, insert, or censor transactions within a block. Typically, this value is captured by external searchers and builders, who essentially impose a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues reach tens of millions 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, aiming to redirect MEV 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 to the current model if the builder is unavailable.
In the second stage, block building would be integrated into Flare Confidential Compute, making the process publicly auditable. The third stage would merge the builder and proposer into a single entity, transitioning existing validators to a verification role.
The proposal also 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. Several changes would be implemented immediately upon approval, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreased 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 roughly 7.5 million, at current transaction volumes.
Even with the increase, a standard Flare transaction would cost 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 lack native support. As of late March 2026, the network reported over $160 million in total value locked, with more than 887,000 active addresses.