In a bid to become one of the first layer-1 blockchains to capture maximal extractable value (MEV) at the protocol level, Flare has unveiled a governance proposal that promises to transform the way block building is conducted. By doing so, it seeks to redirect the revenue generated from MEV away from a select group of specialized actors and into the protocol's own token economy.
MEV refers to the revenue that block builders generate by manipulating transaction orders within a block, effectively imposing a hidden tax on users through practices like front-running and arbitrage. Estimates suggest that MEV revenues can reach tens of millions of dollars on certain networks, with Ethereum and Solana potentially exceeding $500 million and $1 billion, respectively. Flare's proposal outlines a three-stage process to harness MEV, initially by transferring block building to a designated entity operated by the Flare Entity, followed by the integration of block building into Flare Confidential Compute for enhanced transparency, and finally, merging the builder and proposer roles.
Furthermore, the proposal introduces the Flare Income Reinvestment Entity (FIRE), tasked with collecting revenue from various protocol sources, including fees, and utilizing it to reduce the FLR token supply through buybacks and burns. Upon approval, several key changes will be implemented, including a reduction in annual FLR inflation from 5% to 3%, a decrease in the hard cap from 5 billion to 3 billion tokens per year, and a significant increase in the base gas fee from 60 gwei to 1,200 gwei. This increase is expected to raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes, with the cost of a standard Flare transaction remaining a fraction of a cent.
With its roots in the XRP ecosystem, having airdropped its initial token supply to XRP holders in 2023, Flare's FAssets system has successfully brought smart contract functionality to assets on non-native blockchains like XRPL, producing over 150 million FXRP. As of late March 2026, the network boasts over $160 million in total value locked and more than 887,000 active addresses.