In a bid to pioneer protocol-level maximal extractable value (MEV) capture, Flare has unveiled a governance proposal that promises to redefine the blockchain landscape. By redirecting MEV revenue into the protocol's token economics, Flare seeks to minimize the hidden tax imposed on users by external actors. This bold initiative would make Flare one of the first layer-1 blockchains to achieve this feat.
MEV refers to the revenue generated by block builders through the strategic reordering, insertion, or censorship of transactions within a block. Currently, this value is largely captured by a select group of specialized actors, resulting in a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues can reach tens of millions on networks like Arbitrum, upwards of $500 million on Ethereum, and as much as $1 billion on Solana.
Flare's proposal is divided into three stages, with the first stage transferring block building responsibilities from individual validators to a designated builder, initially operated by the Flare Entity. The second stage will integrate block building into Flare Confidential Compute, ensuring public auditability. The final stage will 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 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 FLR token supply through open-market buybacks and burns.
Upon approval, several changes will take effect immediately. The annual FLR inflation rate will 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, is expected to raise the estimated annual FLR burn from roughly 7.5 million to 300 million at current transaction volumes. Notably, even after 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, Flare has distributed its initial token supply through an airdrop to XRP holders in 2023.
Its FAssets system has successfully 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.