Flare published a governance proposal on Thursday that would make it one of the first layer 1 blockchains to set maximum extractable value (MEV) at the protocol level rather than letting it flow to the small number of specialized actors who profit from transaction orders on virtually every major chain.
MEV is the revenue that block builders obtain by reordering, inserting, or censoring transactions within a block. On most blockchains, this value flows to third-party seekers and builders who essentially impose a hidden tax on regular users through front-running, sandwich attacks, and arbitrage.
External estimates put annual MEV revenues at tens of millions on networks like Arbitrum, well over $500 million on Ethereum, and as much as $1 billion on Solana. Flare’s three-tiered proposal would direct revenue into the protocol’s own token economy.
The first phase sees block building move from individual validators to a designated builder, initially managed by the Flare Entity, with a fallback to the current model if the builder is unavailable. In the second case, block building is moved to Flare Confidential Compute, making the process publicly auditable. The third phase merges the builder and submitter into a single entity, shifting 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 computing fees, and the captured MEV. FIRE’s primary mandate is shrinking $FLR token supply via buybacks and open market burns.
Several changes would take effect immediately upon approval. Annual $FLR inflation would drop from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year. A twenty-fold increase in the basic gas allowance, from 60 gwei to 1,200 gwei, would increase the estimated annual $FLR The number of transactions will decrease from roughly 7.5 million to 300 million at the current transaction volume. Even after the increase, a standard Flare transaction would cost a fraction of a cent.
Flare has deep roots in the $XRP ecosystem, after airdropping its initial token supply to $XRP holders in 2023. The FAssets system, which has produced more than 150 million FXRP, is designed to provide smart contract functionality to assets on blockchains such as XRPL that do not natively support it.
The network reports a total value of over $160 million as of the end of March 2026, with more than 887,000 active addresses.