Firelight raises $8 million to expand DeFi protection beyond XRP

Firelight Protocol has raised $8 million to build a protection system for decentralized finance (DeFi), a blockchain-based financial system where users trade without traditional banks. The funding will help expand its collateral options beyond XRP to include bitcoin and Stellar’s XLM.

Fast claims for DeFi losses

The protocol, set to launch its first cover integrations in September, aims to settle eligible smart-contract exploit claims within 10 days. This is much faster than traditional insurance, which can take months. A consortium of independent risk firms, including GFX Labs and Hypernative, will review claims to determine if an exploit occurred and whether it qualifies for coverage.

Firelight’s system represents covered positions as NFTs, which holders can submit after an exploit. The goal is to complete the entire process—from claim submission to payout—in under 10 days.

Targeting fintechs and mainstream adoption

Firelight is designed to appeal to fintechs, neobanks, and payments companies that want to offer onchain yield products but are wary of smart-contract risks. The company’s CEO, Anthony DeMartino, said the system is built to attract mainstream financial firms rather than just crypto traders.

Only a small fraction of the roughly $80 billion locked in DeFi is currently protected by onchain cover, according to Firelight. The new funding will support protocol development, expanding cover offerings, and adding ecosystem partners.

Funding and backers

The investment round was led by Gumi Cryptos Capital, with participation from Maven 11, Metalayer, Joint Effects, and Tribe Capital. Firelight was incubated by Sentora, a DeFi infrastructure provider with $2.4 billion in assets held in its vaults.

Why speed matters

DeMartino emphasized that quick payouts are critical because fintechs and investment strategies often cannot afford to wait months for insurance claims to resolve. Without fast protection, many companies could face severe financial strain after an exploit.

Sources

• CoinDesk