In a groundbreaking move, Flare has put forth a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, rather than allowing it to be exploited by a select few actors. This approach would make Flare one of the first layer-1 blockchains to implement MEV capture in this way. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block. Currently, this value is typically captured by external searchers and builders, who often impose a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues can reach tens of millions of dollars on networks like Arbitrum, upwards of $500 million on Ethereum, and as much as $1 billion on Solana. Flare's proposal outlines a three-stage process to redirect MEV revenue into the network'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 moves block building into Flare Confidential Compute, making the process publicly auditable. The third stage merges 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. If approved, 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 to the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from roughly 7.5 million to 300 million at current transaction volumes. Notably, even after this increase, a standard Flare transaction would still cost only 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 has produced over 150 million FXRP and 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.