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. This move would redirect MEV from a select group of specialized actors to the protocol itself, thereby altering the dynamics of 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. Currently, this value is largely exploited by external searchers and builders, resulting in a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage.
Estimates suggest that annual MEV revenues reach tens of millions of dollars on networks like Arbitrum, exceed $500 million on Ethereum, and possibly reach $1 billion on Solana. Flare's proposal outlines a three-stage plan to integrate MEV revenue into its token economics. The first stage involves transitioning block building from individual validators to a designated builder operated by the Flare Entity, with a fallback mechanism in place. The second stage migrates block building to Flare Confidential Compute, ensuring public auditability.
The third stage consolidates the builder and proposer into a single entity, reassigning existing validators to a verification role. Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), tasked with collecting 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 decrease the FLR token supply through open-market buybacks and burns. Upon approval, several changes would be implemented immediately.
The annual FLR inflation rate would decrease from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year. A significant increase in the base gas fee, from 60 gwei to 1,200 gwei, is expected to raise the 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.
With its roots in the XRP ecosystem, Flare has a notable presence, having distributed its initial token supply to XRP holders in 2023. Its FAssets system has generated over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that lack native support.
As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the cryptocurrency landscape.