Firelight Protocol now covers about $38 million across three DeFi vaults, according to the company. The cover is backed by staked FXRP, the Flare Network version of XRP, and pays out in USDC when defined failures happen. That includes smart contract exploits, oracle breakdowns, and redemption failures.
The three vaults are the Protected Strategies USDC vault on Kraken, plus the USDC Protected and RWA Protected vaults run by Sentora. Firelight says its first cover went live on October 6, 2026, on Sentora’s USD Protected and Protected RWA vaults. Kraken cover came later, announced on October 15.
How the cover periods work
Cover runs in 30-day periods. Participants supply FXRP through Flare’s FAssets system. If a staker leaves early, their stXRP is burned and they stop earning rewards. The remaining FXRP unlocks at the end of the next period. That design keeps capital committed for the coverage window, though it also means exits are not instant.
Claims and payout limits
Firelight’s independent Risk Consortium decides whether an incident qualifies. Sentora then distributes any USDC payments to eligible wallets. Kraken’s support page says the cost of cover is set by Firelight and Sentora and can change from month to month. It is paid out of the vault’s yield. The same page says depositors can get up to $100,000 per address for each coverage period. Kraken also states that this is not insurance. Coverage comes from Firelight and is arranged by Sentora, not by Kraken.
At launch, The Defiant reported onchain records showing $30.5 million of cover for the Kraken-related vault. That number reflects the launch date, not the current split across all three vaults. Sentora enrolled the vault as its independent curator. Kraken does not fund or guarantee payouts.
Pooled capital and XRP price risk
Firelight’s staked capital is pooled across covered vaults. That means a provider earning premiums tied to one vault could take losses from a qualifying incident elsewhere in the portfolio. CryptoSlate noted that a fall in the XRP price could reduce available backing, which may limit how much new cover Firelight can offer. I think that is the key risk to watch, because the backing is not sitting in stablecoins alone.
Validated claims are paid first from Firelight’s stablecoin first-loss buffer. Only the remaining loss reduces the pooled FXRP backing, pro rata across stakers. The setup spreads risk, perhaps more than some depositors expect, but it also ties the size of the safety net to the value of the pledged XRP.
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