A governance proposal from Flare was published on Thursday, making it one of the pioneering layer-1 blockchains to capture maximal extractable value (MEV) at a protocol level. This initiative aims to redirect profits that currently benefit a limited group of specialized actors involved in transaction ordering across major chains.
MEV involves revenue generated by reordering, inserting, or censoring transactions within a block. Typically, this value benefits external searchers and builders who impose hidden fees on users through tactics like front-running, sandwich attacks, and arbitrage. Estimates suggest annual MEV revenues reach tens of millions on Arbitrum, $500 million on Ethereum, and potentially $1 billion on Solana. Flare’s proposal involves a three-stage process to integrate these revenues into the protocol’s token economics.
Initially, block building will transition from individual validators to a designated builder managed by the Flare Entity, with a contingency plan to revert if necessary. The second stage places block building within Flare Confidential Compute for public auditing purposes. In the final phase, the builder and proposer roles merge into one entity, reassigning existing validators to verification functions.
The proposal introduces FIRE, or the Flare Income Reinvestment Entity, which will gather income from multiple protocol sources such as attestation fees, FAsset and Smart Account fees, confidential compute charges, and captured MEV. Its main goal is reducing FLR token supply through open-market buybacks and burns.
Immediate changes following approval include a reduction in annual FLR inflation to 3% from 5%, with the hard cap decreasing to 3 billion tokens per year from 5 billion. The base gas fee will increase twentyfold, rising from 60 gwei to 1,200 gwei, which is projected to boost estimated annual FLR burn from around 7.5 million to 300 million at current transaction levels. Despite this hike, a standard Flare transaction would still cost significantly less than a cent.
Flare maintains strong ties with the XRP ecosystem, having distributed its initial tokens via an airdrop to XRP holders in 2023. Its FAssets system has generated over 150 million FXRP and is designed to introduce smart contract capabilities to blockchains like XRPL that lack native support for such functions.
As of late March 2026, the network reports over $160 million in total value locked and more than 887,000 active addresses.