In a bid to revolutionize its token economics, Flare has introduced a governance proposal that would make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) directly at the protocol level. This move would prevent MEV from being monopolized by a handful of specialized actors who currently profit from manipulating transaction orders across major blockchain networks. 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 regular users through practices like front-running, sandwich attacks, and arbitrage.

Estimates suggest that MEV revenues can 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 is structured into three stages, with the primary goal of redirecting MEV revenue into the protocol's token economics.

Initially, block building would be transferred from individual validators to a designated entity operated by Flare, with a fallback mechanism to the current model if the designated builder is unavailable. The second stage involves moving block building into Flare Confidential Compute, making the process publicly auditable.

The final stage merges the builder and proposer roles into a single entity, transitioning existing validators into a verification role. Additionally, the proposal introduces FIRE (Flare Income Reinvestment Entity), which would collect revenue from various protocol sources, including attestation fees, fees from FAsset and Smart Accounts, confidential compute fees, and captured MEV. FIRE's main objective is to decrease the FLR token supply through open-market buybacks and burns.

Upon approval, several changes would be implemented immediately. The annual FLR inflation rate would decrease from 5% to 3%, and the hard cap would be reduced from 5 billion to 3 billion tokens per year. Furthermore, a 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, is expected to raise the 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 deeply embedded in the XRP ecosystem, having distributed its initial token supply to XRP holders in 2023, Flare's FAssets system has successfully produced over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that lack native support. As of late March 2026, the network boasts over $160 million in total value locked, with more than 887,000 active addresses.