In a groundbreaking move, 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 approach would prevent MEV from being concentrated among a select few specialized actors, who currently profit from manipulating transaction ordering across major chains. Instead, the revenue generated from MEV would be redirected into the protocol's token economics.

MEV refers to the income that block builders derive from reordering, inserting, or censoring transactions within a block. On most blockchains, this value is absorbed by external searchers and builders, effectively imposing a hidden tax on regular users through practices like front-running, sandwich attacks, and arbitrage. External estimates suggest that annual MEV revenues range from tens of millions on networks like Arbitrum to upwards of $500 million on Ethereum and as much as $1 billion on Solana. Flare's proposal is structured into three stages, with the primary objective of integrating MEV revenue into the protocol's token economy.

The first stage involves transferring block building responsibilities from individual validators to a designated builder, initially operated by the Flare Entity, with a fallback to the current model if the builder becomes unavailable. The second stage migrates block building to Flare Confidential Compute, making the process publicly auditable. The third stage consolidates the builder and proposer into a single entity, transitioning existing validators to a verification role.

The proposal also 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 goal is to decrease the FLR token supply through open-market buybacks and burns.

Several key changes would be implemented immediately upon approval, including a reduction in annual FLR inflation from 5% to 3%, with the hard cap decreased to 3 billion tokens per year from 5 billion. Additionally, a 20-fold increase to 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. Flare has strong ties to the XRP ecosystem, having distributed its initial token supply through an airdrop to XRP holders in 2023. Its FAssets system has successfully produced over 150 million FXRP, aiming to bring smart contract functionality to assets on blockchains like XRPL that do not natively support it.

As of late March 2026, the network reports over $160 million in total value locked, with more than 887,000 active addresses.