In a bid to become a pioneer in protocol-level MEV capture, Flare has unveiled a comprehensive governance proposal. Published on Thursday, the proposal outlines a three-stage plan to redirect MEV revenues into the protocol's token economy, thereby minimizing the hidden tax imposed on users by external actors. MEV, which is generated through transaction reordering, insertion, or censorship, is estimated to yield tens of millions of dollars in annual revenue on major networks like Arbitrum, Ethereum, and Solana.
By harnessing this value, Flare seeks to create a more equitable and sustainable ecosystem. The proposal involves transitioning block building from individual validators to a designated entity, initially operated by the Flare Entity, with a fallback mechanism in place. This entity will be responsible for block building, which will eventually be merged with the proposer role, relegating existing validators to a verification function. Furthermore, the introduction of FIRE, the Flare Income Reinvestment Entity, will enable the collection of revenue from various protocol sources, including attestation fees, FAsset and Smart Account fees, and confidential compute fees.
The primary objective of FIRE is to reduce the FLR token supply through strategic buybacks and burns. Upon approval, the proposal will usher in several key changes, including a 40% reduction in annual FLR inflation, from 5% to 3%, and a hard cap decrease from 5 billion to 3 billion tokens per year. Additionally, the base gas fee will increase 20-fold, from 60 gwei to 1,200 gwei, resulting in a significant rise in estimated annual FLR burn, from approximately 7.5 million to 300 million, based on current transaction volumes.
Notably, even with this increase, the cost of a standard Flare transaction will remain a fraction of a cent. As a network deeply rooted in the XRP ecosystem, Flare has a proven track record, having distributed its initial token supply to XRP holders in 2023 through an airdrop.
Its innovative FAssets system has successfully brought smart contract functionality to assets on non-native blockchains like XRPL, yielding over 150 million FXRP. With a total value locked of over $160 million and more than 887,000 active addresses as of late March 2026, Flare is poised to revolutionize the blockchain landscape with its pioneering approach to MEV capture and token economics.