Flare published a governance proposal on Thursday that would make it one of the first layer-1 blockchains to capture maximum extractable value (MEV) at the protocol level, instead of letting it flow to the small number of specialized actors who profit from transaction ordering across virtually every major chain.
MEV is the revenue that block builders extract by rearranging, inserting or censoring transactions within a block. On most blockchains, this value flows to external seekers and builders, who effectively impose a hidden tax on ordinary users through front-running, sandwich attacks and arbitrage.
External estimates put annual MEV revenues in the tens of millions on networks like Arbitrum, upwards of $500 million on Ethereum, and as much as $1 billion on Solana. Flare’s three-step proposal would funnel the revenue into the protocol’s own token economy.
In the first phase, block building is moved from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback to the current model if the builder is unavailable. In the second, block building moves into Flare Confidential Compute, making the process publicly auditable. The third step merges the builder and proposer into a single entity, moving existing validators into a verification role.
The proposal also creates FIRE, the Flare Income Reinvestment Entity, to collect revenue from multiple protocol sources, including attestation fees, FAsset and Smart Account fees, confidential calculation fees, and the registered MEV. FIRE’s primary mandate is to reduce the supply of FLR tokens through open market buyouts and burndowns.
Several changes will take effect immediately upon approval. Annual FLR inflation would drop to 3% from 5%, with the hard cap reduced to 3 billion tokens per year from 5 billion. A 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, would raise estimated annual FLR flare from around 7.5 million to 300 million at current transaction volumes. Even after the increase, a standard Flare transaction would cost a fraction of a cent.
Flare has deep roots in the XRP ecosystem, having distributed its first token supply through an airdrop to XRP holders in 2023. Its FAssets system, which has produced over 150 million FXRP, is designed to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it.
The network reports over $160 million in total value locked at the end of March 2026, with more than 887,000 active addresses.
