On Thursday, Flare released a governance proposal that could make it a pioneer among layer-1 blockchains in capturing maximal extractable value at the protocol level, rather than allowing it to benefit a select few specialized actors who profit from transaction ordering across major chains. This value, known as MEV, is the revenue that block builders generate by reordering, inserting, or censoring transactions within a block.
Typically, this value is captured by external searchers and builders, who effectively impose 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, over $500 million on Ethereum, and up to $1 billion on Solana.
The proposed three-stage plan would redirect this revenue into Flare's token economics. The first stage involves transferring block building 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 moves block building to Flare Confidential Compute, making the process publicly auditable. In the third stage, the builder and proposer are merged into a single entity, shifting the role of existing validators to verification.
The proposal also introduces 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 captured MEV. FIRE's primary objective is to reduce the FLR token supply through open-market buybacks and burns.
Several changes would take effect immediately after approval, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreased 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 roughly 7.5 million to 300 million at current transaction volumes. Even with the increase, a standard Flare transaction would cost 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. The network reports over $160 million in total value locked as of late March 2026, with more than 887,000 active addresses.