On Thursday, Flare unveiled a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximum extractable value (MEV) at the protocol level, rather than allowing it to accrue to a select group of specialized actors who benefit from transaction ordering across major chains. MEV refers to the revenue that block builders generate by reordering, inserting, or censoring transactions within a block. Typically, this value is captured by external searchers and builders, who effectively impose a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues reach tens of millions of dollars on networks like Arbitrum, exceed $500 million on Ethereum, and potentially reach $1 billion on Solana. Flare's proposal would redirect this revenue into the protocol's token economics through a three-stage process. The first stage involves transferring block building from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback to the current model if the builder becomes unavailable. The second stage moves block building into Flare Confidential Compute, making the process publicly auditable.
The third stage merges 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 take effect immediately upon approval, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreasing to 3 billion tokens per year from 5 billion.
A 20-fold increase to the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. Even with the increase, a standard Flare transaction would cost only 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 generated over 150 million FXRP and is designed to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it. As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses.