In a bid to revolutionize its token economics, 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. This move would redirect the revenue currently flowing to a select few specialized actors who capitalize on transaction ordering across major chains.

MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, effectively imposing a hidden tax on users through front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues reach tens of millions of dollars on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal involves a three-stage process to integrate MEV into its token economics.

Initially, block building would transition from individual validators to a designated entity operated by the Flare Entity, with a fallback to the current model if the builder is 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 (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 from 5% to 3%, 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 result in a substantial rise in estimated annual FLR burn, from approximately 7.5 million to 300 million at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction would remain a fraction of a cent. With its roots in the XRP ecosystem, Flare has a history of innovation, having distributed its initial token supply through an airdrop to XRP holders in 2023.

Its FAssets system has enabled over 150 million FXRP, bringing smart contract functionality to assets on blockchains like XRPL that do not natively support it. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses.