On Thursday, Flare published a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level, rather than allowing it to be controlled by a select group of specialized actors who profit from transaction ordering across major chains. MEV refers to the revenue that block builders generate by reordering, inserting, or censoring transactions within a block, effectively imposing a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage.
According to external estimates, annual MEV revenues can reach tens of millions on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal would redirect this revenue into its own token economics through a three-stage process. Initially, block building would be transferred from individual validators to a designated builder operated by the Flare Entity, 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. In the final stage, the builder and proposer would be merged 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, including a reduction in annual FLR inflation from 5% to 3%, and a decrease in the hard cap from 5 billion to 3 billion tokens per year. Additionally, the base gas fee would increase 20-fold, from 60 gwei to 1,200 gwei, resulting in an estimated annual FLR burn of 300 million at current transaction volumes.
This increase would still keep the cost of a standard Flare transaction at a fraction of a cent. With its roots in the XRP ecosystem, Flare has distributed its initial token supply through an airdrop to XRP holders in 2023 and has developed the FAssets system, which has produced over 150 million FXRP, 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.