On Thursday, Flare introduced a groundbreaking governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level. This move would redirect MEV away from a select group of specialized actors who currently profit from transaction ordering across major chains. MEV refers to the revenue generated by block builders through 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 reach tens of millions on networks like Arbitrum, exceed $500 million on Ethereum, and can be as high as $1 billion on Solana. Flare's proposal would channel this revenue into the protocol's 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 becomes unavailable. The second stage would move block building to 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 establishes 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.

Several key changes would take effect immediately upon approval, 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, up from 7.5 million, at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain 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.