In a groundbreaking move, Flare has introduced a governance proposal that would make it a pioneer in capturing maximal extractable value (MEV) at the protocol level, rather than allowing it to benefit a select few specialized actors. This innovative approach would redirect MEV revenue into the protocol's token economics, marking a significant shift in the way blockchains operate. 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 exploited by external searchers and builders, who 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 over $500 million on Ethereum and as much as $1 billion on Solana. Flare's proposal outlines a three-stage plan to capture and utilize MEV revenue. Initially, block building would be transferred from individual validators to a designated builder, with a fallback to the current model if the builder is unavailable.
The second stage would involve moving block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, shifting 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.
Upon approval, several changes would take effect immediately. Annual FLR inflation would decrease to 3% from 5%, with the hard cap reduced 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, would raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes. Notably, even after the increase, a standard Flare transaction would cost only a fraction of a cent.
Flare's roots in the XRP ecosystem run deep, having distributed its initial token supply through an airdrop to XRP holders in 2023. Its FAssets system has produced over 150 million FXRP, enabling smart contract functionality for 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.