In a groundbreaking move, Flare has introduced a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, a significant departure from the current model where MEV benefits a select group of specialized actors. By doing so, Flare would become one of the first layer-1 blockchains to harness MEV in this manner.
MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, effectively imposing a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that MEV revenues can reach tens of millions of dollars on networks such as Arbitrum, over $500 million on Ethereum, and as high as $1 billion on Solana.
Flare's proposal is designed to redirect this revenue into the network'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 to the current model if the designated builder is unavailable. The second stage would involve moving block building into Flare Confidential Compute, making the process publicly auditable.
The final stage would merge the builder and proposer into a single entity, shifting the role of existing validators to a verification capacity. Furthermore, the proposal 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. The primary objective of FIRE is to reduce the supply of FLR tokens through open-market buybacks and burns.
Upon approval, several changes would be implemented immediately. The annual inflation rate of FLR tokens would decrease to 3% from 5%, with the hard cap reduced to 3 billion tokens per year from 5 billion. A significant increase in the base gas fee, from 60 gwei to 1,200 gwei, would result in an estimated annual FLR burn of 300 million, up from approximately 7.5 million, at current transaction volumes.
Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent. Flare's roots in the XRP ecosystem are deep, having conducted an airdrop of its initial token supply to XRP holders in 2023. The network's FAssets system has produced over 150 million FXRP, aiming 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, underscoring its growing presence in the cryptocurrency space.