In a groundbreaking move, Flare has put forth 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 benefit a select few specialized actors. This shift would significantly impact the way transactions are ordered and executed across the network.
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. On most blockchains, this value is absorbed by external searchers and builders, resulting in front-running, sandwich attacks, and arbitrage. Estimated annual MEV revenues are substantial, with tens of millions on networks like Arbitrum, over $500 million on Ethereum, and as much as $1 billion on Solana.
Flare's proposal would redirect 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 involve moving block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, shifting existing validators to a verification role.
Additionally, the proposal 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.
The annual FLR inflation rate would decrease to 3% from 5%, with the hard cap reduced to 3 billion tokens per year from 5 billion. A significant increase to the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from roughly 7.5 million to 300 million at current transaction volumes.
Notably, even with this increase, a standard Flare transaction would cost only 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. Its FAssets system has produced over 150 million FXRP, aiming 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.