On Thursday, Flare published a governance proposal that aims to make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level. This move would prevent MEV from flowing into the hands of a select few specialized actors who currently profit from transaction ordering on major chains. MEV refers to the revenue generated by block builders through reordering, inserting, or censoring transactions within a block.
Typically, this value is captured by external searchers and builders, effectively imposing a hidden tax on regular users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that MEV revenues can reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and as high as $1 billion on Solana. The proposed three-stage plan by Flare would redirect this revenue into the protocol's token economics. The first stage involves shifting block building from individual validators to a designated builder operated by the Flare Entity, with the option to revert to the current model if the builder becomes unavailable.
The second stage moves block building into Flare Confidential Compute, making the process publicly auditable. The final stage merges the builder and proposer into a single entity, transitioning existing validators into a verification role. The proposal also 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.
FIRE's primary objective is to decrease the FLR token supply through open-market buybacks and burns. Upon approval, several changes would take effect immediately. The annual FLR inflation rate would decrease from 5% to 3%, and the hard cap would be reduced from 5 billion to 3 billion tokens per year.
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. Notably, even with this increase, the cost of a standard Flare transaction would 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 and is designed 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.