In a bold move, Flare has unveiled a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level, thereby preventing this value from being monopolized by a select few specialized actors who currently profit from transaction ordering across 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 practices such as front-running, sandwich attacks, and arbitrage.
According to external estimates, annual MEV revenues can reach tens of millions on networks like Arbitrum, exceed $500 million on Ethereum, and even surpass $1 billion on Solana. Flare's proposal, which is divided into three stages, aims to redirect this revenue into the protocol's token economics.
The first stage involves transferring block building from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable. The second stage relocates 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 will collect revenue from multiple 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%, with the hard cap 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, would result in a significant rise in 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, which has generated over 150 million FXRP, 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.