In a groundbreaking move, Flare has unveiled a governance proposal that seeks to capture maximal extractable value (MEV) at the protocol level, a first for a layer-1 blockchain. This innovative approach would redirect MEV revenue, currently dominated by a select few specialized actors, into the protocol's token economy. MEV refers to the income generated by block builders through the reordering, insertion, or censorship of transactions within a block, effectively imposing a hidden tax on users.

Estimates suggest that MEV revenues can reach tens of millions on certain networks, such as Arbitrum, and even exceed $1 billion on Solana. Flare's proposal is structured into three stages, with the first stage involving the transfer of block building from individual validators to a designated entity, initially managed by the Flare Entity, with a fallback option to the current model if needed. The second stage would integrate block building into Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, transitioning existing validators to a verification role.

Additionally, the proposal introduces FIRE, the Flare Income Reinvestment Entity, which would collect revenue from various protocol sources, including attestation fees and captured MEV, and primarily focus on reducing the FLR token supply through open-market buybacks and burns. Upon approval, several changes would take effect immediately, including a reduction in annual FLR inflation from 5% to 3%, a decrease in the hard cap from 5 billion to 3 billion tokens per year, and a significant increase in the base gas fee.

This increase would result in a substantial rise in estimated annual FLR burn, from approximately 7.5 million to 300 million, at current transaction volumes. Notably, Flare has strong ties to the XRP ecosystem, having distributed its initial token supply through an airdrop to XRP holders in 2023, and its FAssets system has successfully brought smart contract functionality to assets on blockchains like XRPL. As of late March 2026, the network boasts over $160 million in total value locked and more than 887,000 active addresses.