In a groundbreaking move, Flare has unveiled a governance proposal that could make it a pioneer among layer-1 blockchains in capturing maximal extractable value (MEV) at the protocol level. This approach would divert MEV revenue away from a select group of actors who currently benefit from transaction ordering across major chains. Instead, the value would be integrated into Flare's token economics. MEV refers to the revenue generated by block builders through reordering, inserting, or censoring transactions within a block.

On most blockchains, this value is captured by external searchers and builders, effectively imposing a hidden tax on users through front-running, sandwich attacks, and arbitrage. Estimates suggest that annual MEV revenues range from tens of millions on networks like Arbitrum to over $500 million on Ethereum and up to $1 billion on Solana.

Flare's proposal is designed to redirect this revenue into its own token economy through a three-stage process. Firstly, block building would transition from individual validators to a designated builder operated by the Flare Entity, with a fallback to the current model if the builder becomes unavailable.

The second stage would involve moving block building into Flare Confidential Compute, making the process publicly auditable. In the final stage, the builder and proposer would be merged into a single entity, with existing validators assuming 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 objective is to reduce the FLR token supply through open-market buybacks and burns. Upon approval, several changes would be implemented immediately.

The annual FLR inflation rate would decrease from 5% to 3%, with the hard cap reduced from 5 billion to 3 billion tokens per year. A 20-fold increase in the base gas fee, from 60 gwei to 1,200 gwei, would raise the estimated annual FLR burn from approximately 7.5 million to 300 million at current transaction volumes.

Notably, even with this increase, a standard Flare transaction would still cost only 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 generated 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.