In a groundbreaking move, Flare has introduced a governance proposal aimed at capturing maximal extractable value (MEV) at the protocol level, a first for a layer-1 blockchain. This approach would redirect MEV revenues, currently flowing to a select few specialized actors, into the protocol's token economics. MEV refers to the revenue generated by reordering, inserting, or censoring transactions within a block, essentially imposing a hidden tax on users through front-running, sandwich attacks, and arbitrage.

External estimates suggest that MEV revenues reach tens of millions on networks like Arbitrum, over $500 million on Ethereum, and up to $1 billion on Solana. Flare's proposal outlines a three-stage process to integrate MEV capture into its token economy. Initially, block building would transition from individual validators to a designated builder operated by the Flare Entity, with a fallback to the current model if needed.

The second stage would move block building to Flare Confidential Compute, making the process publicly auditable. The final stage would merge the builder and proposer into a single entity, shifting validators to a verification role. The proposal also establishes the Flare Income Reinvestment Entity (FIRE), tasked with collecting 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 from 5% to 3%, with the hard cap reduced to 3 billion tokens per year from 5 billion.

A significant 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 the increase, a standard Flare transaction would remain relatively inexpensive, costing only a fraction of a cent. With its roots in the XRP ecosystem, Flare has a history of innovation, having distributed its initial token supply through an airdrop to XRP holders in 2023.

The FAssets system has successfully brought smart contract functionality to assets on 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, demonstrating its growing presence in the cryptocurrency space.