In a bid to transform the crypto landscape, Flare has unveiled a governance proposal that would make it one of the first layer-1 blockchains to capture maximal extractable value (MEV) directly within its protocol, rather than allowing it to be exploited by a select group of specialized actors. This move would significantly impact the way transaction ordering is handled across major chains. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, essentially imposing a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues can reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal outlines a three-stage plan to redirect MEV revenue into its token economics.
The first stage involves transferring block building responsibilities from individual validators to a designated builder operated by the Flare Entity, with the option to revert to the current model if the builder becomes unavailable. The second stage transitions block building into Flare Confidential Compute, making the process publicly auditable.
The final stage merges the builder and proposer into a single entity, shifting the role of existing validators to verification. Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), which will 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 supply of FLR tokens through open-market buybacks and burns. Upon approval, several changes will be implemented immediately. The annual FLR inflation rate will decrease from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year. A significant increase in the base gas fee, from 60 gwei to 1,200 gwei, is expected to raise the estimated annual FLR burn from approximately 7.5 million to 300 million, based on current transaction volumes.
Notably, even with this increase, the cost of a standard Flare transaction will remain a fraction of a cent. With its roots deeply embedded in the XRP ecosystem, having conducted an airdrop to XRP holders in 2023, Flare's FAssets system has successfully produced over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that lack native support.
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 cryptocurrency space.