In a bid to revolutionize its protocol, Flare has introduced a governance proposal that would enable the capture of maximal extractable value (MEV) at the protocol level, thereby reducing the dominance of specialized actors in transaction ordering. This move would make Flare one of the pioneering layer-1 blockchains to achieve this feat.
MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, effectively creating a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. On most blockchains, this value is accrued by external searchers and builders.
Estimates suggest that annual MEV revenues can reach tens of millions on networks like Arbitrum, up to $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal involves a three-stage process to redirect MEV revenue into the protocol's token economics. The first stage involves transferring block building from individual validators to a designated builder operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable.
The second stage transitions block building to 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 a verification capacity. 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 decrease 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 approximately 7.5 million to 300 million at current transaction volumes.
Even with this increase, the cost of a standard Flare transaction will remain 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, 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.