In a bid to become one of the first layer-1 blockchains to harness maximal extractable value (MEV) at the protocol level, Flare has introduced a governance proposal that promises to transform the way transaction ordering is handled across its network. 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 effectively impose a hidden tax on ordinary users through practices such as front-running, sandwich attacks, and arbitrage. According to external estimates, annual MEV revenues can 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 seeks to redirect this revenue into its own token economics through a three-stage process. The first stage involves transferring block building responsibilities from individual validators to a designated builder operated by the Flare Entity, with a fallback mechanism in place in case 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, reassigning existing validators to a verification role.
Additionally, the proposal 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 from 5% to 3%, with the hard cap 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 will remain a fraction of a cent. As a network with deep ties to the XRP ecosystem, Flare has distributed its initial token supply through an airdrop to XRP holders in 2023 and has developed its FAssets system, which has generated over 150 million FXRP, to bring smart contract functionality to assets on blockchains like XRPL that lack native support. As of late March 2026, the network boasts over $160 million in total value locked and more than 887,000 active addresses.