In a bid to revolutionize the blockchain landscape, Flare has unveiled a governance proposal that aims to capture maximal extractable value (MEV) at the protocol level, a move that would set it apart from other layer-1 blockchains. This innovative approach would redirect the revenue generated by MEV away from a select group of specialized actors and into the protocol's own token economy. MEV refers to the revenue that block builders generate by reordering, inserting, or censoring transactions within a block, effectively imposing a hidden tax on ordinary users through 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 much as $1 billion on Solana.
Flare's proposed three-stage plan would route this revenue into the protocol's token economics, transforming the way the network operates. The first stage would see block building transition 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 would migrate block building to Flare Confidential Compute, making the process publicly auditable. The third stage would merge the builder and proposer into a single entity, shifting existing validators to a verification role. A key component of the proposal is the creation of FIRE, the Flare Income Reinvestment Entity, which would collect revenue from multiple protocol sources, including attestation fees, FAsset and Smart Account fees, confidential compute fees, and the 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 to the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from roughly 7.5 million to 300 million at current transaction volumes. Notably, even after the increase, a standard Flare transaction would cost only a fraction of a cent. With its roots deeply embedded in the XRP ecosystem, Flare has distributed its initial token supply through an airdrop to XRP holders in 2023. The network's FAssets system has produced over 150 million FXRP, enabling smart contract functionality for assets on blockchains like XRPL that do not natively support it.
As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the blockchain space.