In a bid to become a pioneer in layer-1 blockchain technology, Flare has unveiled a governance proposal that seeks to capture maximal extractable value (MEV) at the protocol level. This innovative approach would prevent MEV from being siphoned off by a select group of specialized actors, who currently reap substantial profits from transaction ordering across major blockchain networks.
Instead, the proposed system would redirect this revenue into the network's token economy. MEV refers to the income generated by block builders through the reordering, insertion, or censorship of transactions within a block. On most blockchain platforms, this value is exploited by external searchers and builders, resulting in 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, exceed $500 million on Ethereum, and even surpass $1 billion on Solana.
The proposed three-stage plan would channel this revenue into Flare's token economics. The first stage involves transferring block building responsibilities from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback option 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, reassigning 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 decrease 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 raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. Even with this 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 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.