Firelight secures $8 million to protect DeFi vaults using staked XRP

Firelight, a protocol designed to protect decentralized finance (DeFi) vaults from exploits, has raised $8 million in a seed funding round led by Gumi Cryptos Capital. The company plans to launch its first cover integrations this month.

DeFi, short for decentralized finance, refers to financial services like lending and trading that run on blockchains without traditional intermediaries. Firelight uses staked XRP, a cryptocurrency, to back its protection products.

The protocol currently holds $76 million in staked XRP on the Flare network, making it the largest protocol on Flare, which has a total of $133 million locked across 39 protocols.

How Firelight’s cover system works

Users deposit XRP, which is converted to FXRP on Flare through the network’s FAssets system. They receive stXRP, a liquid staking token, in return. The pooled staked XRP serves as the capital to pay out claims for covered events, such as smart contract exploits, oracle manipulation, or governance attacks.

Premiums paid by vaults and protocols buying protection generate yields for stakers. Claims are validated by a group of five external firms—GFX Labs, Hypernative, Credora, Native, and Cyfrin—using onchain data. If a claim is approved and exhausts a first-loss buffer, staked capital is reduced proportionally across all staking positions.

Firelight states that its coverage is not insurance and does not create an insurance contract. The protocol has been audited by OpenZeppelin and Coinspect and operates a bug bounty program through Immunefi.

Funding and team

Investors in the $8 million round include Maven 11, Metalayer, Joint Effects, and Tribe Capital. Firelight was incubated by Sentora, a company formed from the merger of IntoTheBlock and Trident Digital, which manages over $3 billion in DeFi vaults for clients like Kraken and EtherFi.

Anthony DeMartino, CEO of both Firelight and Sentora, previously worked in risk strategies at Coinbase and in trading roles at HSBC, Barclays, and UBS. Jesus Rodriguez, co-founder of Sentora and Firelight’s CTO, sold his AI startup NeuralFabric to Cisco last year. Chief Strategy Officer Connor Sullivan joined from Fireblocks, where he worked on underwriting reinsurance.

Market context

Onchain cover remains a small part of DeFi, with about $123.7 million in capital across 27 insurance protocols protecting roughly $88.3 billion in total DeFi value, or about 0.14%, according to DefiLlama. Nexus Mutual accounts for about 88% of that capital. Firelight’s model separates the capital backing cover from the protocols being covered, as the staked XRP does not sit inside those protocols.

What happens next

Firelight’s first cover integrations are set to go live this month. The protocol also plans to add Bitcoin (BTC) and Stellar (XLM) as additional backing assets in the future.

Sources

• The Defiant