In a bid to revolutionize its token economics, Flare has introduced a governance proposal that aims to capture maximal extractable value (MEV) at the protocol level. This move would make Flare one of the pioneering layer-1 blockchains to harness MEV, which is currently dominated by a handful of specialized actors who reap benefits from transaction ordering across 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. By redirecting this revenue into its token economics, Flare seeks to create a more equitable and sustainable ecosystem.
The proposed three-stage plan involves transitioning block building from individual validators to a designated builder, making the process publicly auditable through Flare Confidential Compute, and eventually merging the builder and proposer into a single entity. Furthermore, the proposal introduces FIRE, the Flare Income Reinvestment Entity, which would collect revenue from various protocol sources, including fees and captured MEV, to reduce FLR token supply through open-market buybacks and burns.
If approved, the proposal would lead to several immediate changes, including a reduction in annual FLR inflation from 5% to 3%, a hard cap decrease from 5 billion to 3 billion tokens per year, and a significant increase in the base gas fee. With its deep roots in the XRP ecosystem and innovative solutions like FAssets, Flare is poised to make a significant impact in the blockchain space, with over $160 million in total value locked and more than 887,000 active addresses as of late March 2026.