In a groundbreaking move, Flare has introduced a governance proposal that would enable the network to capture maximal extractable value (MEV) at the protocol level, thereby reducing the revenue that flows to external actors. This approach would make Flare one of the first layer-1 blockchains to achieve this feat.

MEV refers to the revenue generated by reordering, inserting, or censoring transactions within a block, which is typically exploited by a small group of specialized actors across various major chains. By redirecting this value into the protocol's token economics, Flare's three-stage proposal would revolutionize the way MEV is handled. External estimates suggest that MEV revenues can reach tens of millions on networks like Arbitrum, and upwards of $500 million on Ethereum.

The proposal's first stage involves transferring block building responsibilities from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable. The second stage would move block building into Flare Confidential Compute, making the process publicly auditable. The third stage would merge the builder and proposer into a single entity, shifting 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, 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 to 3% from 5%, with the hard cap reduced to 3 billion tokens per year from 5 billion.

A 20-fold increase to the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from roughly 7.5 million to 300 million at current transaction volumes. Notably, even after the increase, a standard Flare transaction would cost only a fraction of a cent.

With its roots in the XRP ecosystem, Flare has developed a system that brings smart contract functionality to assets on blockchains like XRPL that do not natively support it. The network has reported over $160 million in total value locked as of late March 2026, with more than 887,000 active addresses.