In a groundbreaking move, Flare has put forth a governance proposal that would enable it to capture maximal extractable value (MEV) directly at the protocol level, a first for a layer-1 blockchain. This approach would divert MEV away from a select group of specialized actors who currently profit from manipulating transaction orders across major blockchain networks. MEV refers to the revenue generated by block builders through the strategic reordering, insertion, or censorship of transactions within a block.
Typically, this value is absorbed by external searchers and builders, effectively imposing a hidden tax on regular users through practices like front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues reach tens of millions of dollars on networks such as Arbitrum, exceed $500 million on Ethereum, and could be as high as $1 billion on Solana. Flare's proposal outlines a three-stage plan to redirect MEV revenue into its own token economy.
Initially, block building would be transferred from individual validators to a designated entity operated by the Flare Entity, with a fallback option to the current model if the designated builder becomes unavailable. The second stage would involve moving block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer roles into a single entity, transitioning existing validators into a verification capacity. Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), designed to collect revenue from various protocol sources, including attestation fees, fees from FAsset and Smart Accounts, 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, based on current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent. Flare has a deep connection to the XRP ecosystem, having distributed its initial token supply to XRP holders through an airdrop in 2023. Its FAssets system, which has generated over 150 million FXRP, aims to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it.
As of late March 2026, the network reported over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the cryptocurrency landscape.