In a bid to redefine the blockchain landscape, Flare has unveiled a governance proposal that seeks to capture maximal extractable value (MEV) at the protocol level. This innovative approach would redirect MEV revenue, typically monopolized by a handful of specialized actors, back into the protocol's token economy. MEV refers to the profits extracted by block builders through the strategic reordering, insertion, or censorship of transactions within a block.
Currently, this value is largely captured by external searchers and builders, resulting in a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues reach tens of millions on networks like Arbitrum, upwards of $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal is designed to harness this value and integrate it into the protocol's token economics through a three-stage process.
Initially, block building would transition from individual validators to a designated builder operated by the Flare Entity, with a fallback mechanism in place. The second stage would see block building become publicly auditable through Flare Confidential Compute. Finally, the builder and proposer roles would merge, shifting existing validators to a verification capacity. A new entity, FIRE (Flare Income Reinvestment Entity), would be established 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 would be to reduce the FLR token supply through open-market buybacks and burns. Upon approval, several changes would take effect immediately, including a reduction in annual FLR inflation from 5% to 3% and a decrease in the hard cap from 5 billion to 3 billion tokens per year.
The base gas fee would increase 20-fold, from 60 gwei to 1,200 gwei, potentially raising the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would 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 brought smart contract functionality to assets on blockchains like XRPL, producing over 150 million FXRP. As of late March 2026, the network boasts over $160 million in total value locked and more than 887,000 active addresses, underscoring its growing presence in the blockchain space.