In a bid to revolutionize its token economics, Flare has unveiled 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 approach would prevent MEV from being monopolized by a select group of actors who currently profit from transaction ordering across various major chains. MEV refers to the revenue generated by block builders through reordering, inserting, or censoring transactions within a block, effectively imposing a hidden tax on ordinary users through practices like front-running, sandwich attacks, and arbitrage.

According to external estimates, annual MEV revenues can be substantial, ranging 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 divided into three stages, with the primary goal of channeling MEV revenue back into the protocol's token economics.

The first stage involves transferring block building responsibilities from individual validators to a designated builder operated by the Flare Entity, with a fallback option to the current model if the builder becomes unavailable. The second stage transitions block building to Flare Confidential Compute, making the process publicly auditable.

The final stage merges the builder and proposer into a single entity, reassigning existing validators to a verification role. The proposal also introduces FIRE, the Flare Income Reinvestment Entity, which will collect revenue from multiple 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 will take effect immediately. The annual FLR inflation rate will decrease to 3% from 5%, and the hard cap will be reduced to 3 billion tokens per year from 5 billion.

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 roughly 7.5 million to 300 million at current transaction volumes. Notably, even with this increase, the cost of a standard Flare transaction will 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 produced over 150 million FXRP and is designed 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.