Flare has unveiled a governance proposal to become one of the first layer-1 blockchains to capture maximal extractable value (MEV) at the protocol level, rather than allowing it to benefit a select few specialized actors who profit from transaction ordering. This move would redirect MEV revenue into the protocol's token economics. MEV refers to the revenue generated by block builders through reordering, inserting, or censoring transactions within a block.
Currently, this value primarily benefits external searchers and builders, who impose a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues range from tens of millions on networks like Arbitrum to over $1 billion on Solana. The proposal is divided into three stages: first, block building would be transferred from individual validators to a designated builder operated by the Flare Entity, with a fallback option 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, shifting existing validators to a verification role. Additionally, the proposal establishes the Flare Income Reinvestment Entity (FIRE) to 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%, and the hard cap would be 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 raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. 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 produced 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.