In a pioneering move, Flare has unveiled a governance proposal that would enable it to capture maximal extractable value (MEV) at the protocol level, rather than allowing it to accrue to a select group of specialized actors. This approach would make Flare one of the first layer-1 blockchains to achieve this feat. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block. Currently, this value is largely exploited by external searchers and builders, who impose a hidden tax on ordinary users through practices such as front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues can reach tens of millions of dollars on networks like Arbitrum, upwards of $500 million on Ethereum, and as much as $1 billion on Solana. Flare's proposal would redirect this revenue into the protocol's token economics through a three-stage process. Initially, block building would be transferred from individual validators to a designated builder operated by the Flare Entity, with a fallback mechanism in place in case the builder becomes unavailable.
The second stage would involve the integration of block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, reassigning existing validators to a verification role. The proposal also introduces 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 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 to 3% from 5%, with the hard cap reduced 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 this increase, the cost of a standard Flare transaction would remain 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 successfully brought smart contract functionality to assets on blockchains like XRPL, producing over 150 million FXRP. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses.