In a groundbreaking move, Flare has introduced a governance proposal that would enable it to capture maximal extractable value (MEV) directly at the protocol level, rather than allowing it to benefit a select group of specialized actors. This approach would make Flare one of the first 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.
Currently, this value is largely captured by external searchers and builders, who essentially impose 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 like Arbitrum, upwards of $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal outlines a three-stage plan to redirect MEV revenue into the protocol's token economics.
The first stage involves transferring block building responsibilities from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback 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 third stage merges the builder and proposer into a single entity, transitioning existing validators to a verification role. The proposal also establishes the Flare Income Reinvestment Entity (FIRE), 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 reduce 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 to 3% from 5%, and the hard cap would be 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. Notably, even with this increase, a standard Flare transaction would cost only 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.