In a bid to revolutionize its protocol, Flare has put forth a governance proposal that aims to capture maximal extractable value (MEV) at the protocol level, a first for a layer-1 blockchain. This move would redirect MEV revenue, currently dominated by a select group of actors, back into the protocol's token economy. MEV refers to the revenue generated by block builders through the reordering, insertion, or censorship of transactions within a block, essentially imposing a hidden tax on users.

Estimates suggest that MEV revenues reach tens of millions of dollars on networks like Arbitrum, upwards of $500 million on Ethereum, and as high as $1 billion on Solana. Flare's proposal is structured into three stages, with the first stage transferring block building responsibilities from individual validators to a designated entity, initially managed by the Flare Entity, with the option to revert to the current model if the builder is unavailable. The second stage transitions block building to Flare Confidential Compute, making the process publicly auditable, and the third stage merges the builder and proposer into a single entity, transitioning existing validators to a verification role.

Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), tasked with collecting revenue from various protocol sources, including fees from attestation, FAsset, Smart Accounts, confidential compute, and captured MEV, to buy back and burn FLR tokens, effectively reducing the token supply. Upon approval, several changes would be implemented immediately, including a reduction in annual FLR inflation from 5% to 3%, capping the hard limit at 3 billion tokens per year, down from 5 billion. The base gas fee would increase 20-fold, from 60 gwei to 1,200 gwei, significantly raising the estimated annual FLR burn from approximately 7.5 million to 300 million, based on 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 deeply embedded in the XRP ecosystem, having conducted an airdrop to XRP holders in 2023, Flare's FAssets system has successfully brought smart contract functionality to assets on non-native blockchains like XRPL, producing over 150 million FXRP. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses, underscoring its growing presence in the blockchain landscape.