Flare Decides MEV Vampires Should Work For the Protocol, Slashes Inflation by 40%

Flare dropped a governance proposal Thursday that would make it one of the first L1s to capture maximal extractable value at the protocol level—instead of letting it flow to the small club of specialized actors who profit from transaction ordering on virtually every major chain. It's a power move that would make your average degen trader feel like they finally got invited to the yacht party, except the yacht was always supposed to be theirs.

MEV is the revenue block builders extract by reordering, inserting, or censoring transactions within a block. On most chains, this value goes to external searchers and builders who effectively impose a hidden tax on ordinary users through front-running, sandwich attacks, and arbitrage. External estimates put annual MEV revenues at tens of millions on networks like Arbitrum, upwards of $500 million on Ethereum, and as much as $1 billion on Solana. That's a lot of sandwiches being eaten, and most people at the table didn't even know there was a menu.

Flare's three-stage proposal would route that revenue into the protocol's own token economics. First, block building moves from individual validators to a designated builder—initially run by the Flare Entity—with a fallback to the current model if the builder goes dark. Second, block building moves into Flare Confidential Compute, making the process publicly auditable. Third, the builder and proposer merge into a single entity, shifting existing validators to a verification role. Think of it as reorganizing the kitchen staff: the chefs used to run the restaurant, now they're just making sure the food doesn't poison anyone.

The proposal also creates FIRE, the Flare Income Reinvestment Entity, to collect revenue from multiple protocol