In a groundbreaking move, Flare has put forth a governance proposal that aims to revolutionize the way maximal extractable value (MEV) is captured on its network. By integrating MEV capture at the protocol level, Flare would become one of the pioneering layer-1 blockchains to do so, thereby reducing the revenue that currently flows to a select group of specialized actors who exploit transaction ordering on various major chains. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block.
On most blockchains, this value is siphoned off by external searchers and builders, who effectively impose a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues range from tens of millions on networks like Arbitrum to upwards of $500 million on Ethereum and as much as $1 billion on Solana. Flare's proposal outlines a three-stage plan to redirect this 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 migrates block building to Flare Confidential Compute, making the process publicly auditable. The third stage merges the builder and proposer into a single entity, reassigning existing validators to 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 reduce the FLR token supply through open-market buybacks and burns. Several changes would take effect immediately upon approval, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreasing to 3 billion tokens per year from 5 billion. A 20-fold increase to the base gas fee, from 60 gwei to 1,200 gwei, is expected to raise the estimated annual FLR burn from roughly 7.5 million to 300 million at current transaction volumes.
Despite this increase, a standard Flare transaction would still cost only a fraction of a cent. With its roots deeply embedded in the XRP ecosystem, Flare has 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.