Vault Architecture
The Firelight vault holds the staked capital that backs coverage and issues the stXRP token that represents a staker's position. This page introduces the vault model at the MVP, where the single supported collateral is stXRP.
ERC-4626 foundation
The Firelight vault implements the ERC-4626 tokenized vault standard. This brings three benefits:
Composability. stXRP behaves like any other ERC-20, usable as collateral or liquidity across the broader DeFi ecosystem.
Standardized accounting. Deployments, redemptions, share-to-asset conversions, and period-based balances follow a well-understood interface that wallets, aggregators, and integrators can treat uniformly.
Predictable integration. Systems building on top of Firelight can rely on standard vault semantics rather than custom wrappers.
The vault is non-custodial. The underlying assets remain in smart contracts, and stakers retain control through cryptographic means.
FXRP as capital
At the MVP, the Firelight vault accepts a single asset: FXRP (backed by XRP via Flare), this is already live in Phase 1. When FXRP is staked in the Firelight vault, stXRP is issued. Staking is permissionless, anyone can deploy FXRP. The vault:
Accepts FXRP deployments and tracks each staker's balance
Lets the staked collateral back active cover actively enabled on existing program vaults
Accrues base staking emissions from premiums into the position's redemption value over time
Support for additional collateral assets is on the roadmap and would be introduced through governance in later versions. The documentation here describes the stXRP MVP.
Slashing applies to staked capital
When a validated claim exhausts the protocol's First-Loss Buffer, the remaining loss is met by slashing vault capital pro-rata across all positions. There is no separate "protected" or "unprotected" segment of the vault: once coverage is live, all staked capital in the protocol is part of the backing and is slashable. Stakers accept this exposure in exchange for the share of protocol emissions.
Slashing mechanics and the loss waterfall are covered in Risk and Exposure.
First-Loss Buffer
Alongside the staker vault, Firelight maintains a stablecoin First-Loss Buffer. The buffer is not a staker vault: it is protocol-owned capital that absorbs the first tranche of any validated claim, before any staker collateral is slashed. It sits between claims and the staked vault and protects stakers from the smallest loss incidents.
The First-Loss Buffer feeds into the loss waterfall covered in Claims Liquidation.
Vault lifecycle summary
A typical deployment moves through these states:
A staker stakes FXRP into the protocol and receives stXRP.
The position is recorded and begins accruing rewards shortly after deployment.
Vault collateral counts toward available coverage capacity at the next period boundary.
If a validated claim's loss exceeds the First-Loss Buffer, the vault applies a pro-rata slash across all positions.
On withdrawal, the position is closed and the underlying becomes claimable after the cooldown period.
Where to read next
Staking Overview walks through the capital-provider side in detail.
Risk and Exposure covers slashing and the loss waterfall.
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