In a bid to lead the way in layer-1 blockchain innovation, Flare has unveiled a comprehensive governance proposal. The plan, announced on Thursday, focuses on capturing maximal extractable value (MEV) directly within the protocol, rather than allowing it to benefit a select group of specialized actors who currently profit from transaction ordering. This move could potentially disrupt the status quo across major blockchain networks. MEV refers to the revenue generated by block builders through reordering, inserting, or censoring transactions within a block.
On most blockchains, this value is captured by external searchers and builders, who, in effect, impose a hidden tax on regular users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues can be substantial, reaching tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal is structured into three stages, designed to integrate MEV revenue into the network's token economics.
Initially, block building will transition from individual validators to a designated builder operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable. The second stage involves moving block building into Flare Confidential Compute, making the process publicly auditable.
The final stage merges the builder and proposer into a single entity, shifting the role of existing validators to a verification capacity. Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), which will collect revenue from various protocol sources, including attestation fees, fees from FAsset and Smart Accounts, confidential compute fees, and the captured MEV. FIRE's primary objective is to decrease the FLR token supply through open-market buybacks and burns. Upon approval, several key changes will be implemented immediately.
The annual FLR inflation rate will be reduced to 3% from the current 5%, with the hard cap lowered to 3 billion tokens per year from 5 billion. Furthermore, a 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, is expected to significantly raise the 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. Flare has strong ties to the XRP ecosystem, having initially distributed its tokens through an airdrop to XRP holders in 2023. Its FAssets system has enabled the creation of 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 boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the cryptocurrency landscape.