> For the complete documentation index, see [llms.txt](https://docs.firelight.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.firelight.finance/for-program-operators/cover-tokens.md).

# Cover Tokens

Every active Firelight coverage position is represented by a **Cover Token**: an on-chain ERC-721 token held in the program operator's wallet. It is not an NFT collectible. It is a non-fungible on-chain record of what a program operator has elected to cover, including the beneficiary address used for payouts.

### One token per coverage position, per period

A program operator receives one Cover Token per coverage position for the 30-day period it covers. The token carries the full coverage state on-chain. Its core metadata fields are:

<table data-search="false"><thead><tr><th>Field</th><th>Description</th></tr></thead><tbody><tr><td>coverAmount</td><td>Total aggregate coverage in the coverage position's denomination</td></tr><tr><td>markets[]</td><td>Per-market breakdown: chain, protocol, market, allocated amount, with an optional pool identifier for DEX positions</td></tr><tr><td>rate</td><td>Weighted average premium rate for the coverage position</td></tr><tr><td>premium</td><td>Premium settled at matching</td></tr><tr><td>beneficiary</td><td>Program Operator designated address that receives any payout for the Cover Token</td></tr><tr><td>periodStart / periodEnd</td><td>Activation and expiry timestamps for the 30-day period</td></tr><tr><td>termsURI</td><td>Reference to the full legal cover terms, published to IPFS</td></tr><tr><td>status</td><td>ACTIVE, EXPIRED, or SETTLED</td></tr></tbody></table>

The `termsURI` field anchors the full cover terms for that period. Cover Tokens sharing identical terms reference the same document. The complete terms are published to IPFS closer to launch.

### Token states

A Cover Token moves through a small set of states:

| State   | Meaning                                                                                                                               |
| ------- | ------------------------------------------------------------------------------------------------------------------------------------- |
| ACTIVE  | Coverage is live for the current period. The vault with enabled coverage is covered for declared markets up to the allocated amounts. |
| EXPIRED | The period has ended without the cover being renewed. No further coverage applies.                                                    |
| SETTLED | The token's coverage has been fully consumed by validated payouts.                                                                    |

### When a covered incident occurs

Firelight automatically determines coverage by reading active Cover Tokens. When a covered incident occurs, the protocol identifies exposed positions and includes valid coverage in the payout set. Approved payouts are sent directly to the token's beneficiary address. See [Claims Process](/for-program-operators/claims-process.md).

Because coverage is managed directly on-chain, an ACTIVE Cover Token remains in the holder's wallet throughout. Transfer behavior during an open incident is governed by the cover terms to ensure positions remain consistent until resolution.

### Partial and repeated payouts

A single incident may consume less than the full coverage amount. The token tracks remaining cover, and the holder remains covered for the unconsumed remainder of declared markets through the rest of the period. If multiple covered incidents occur in the same period, each draws down the token's remaining cover until the period ends or the token is fully consumed (status SETTLED).

### Where to read next

* [Claims Process](/for-program-operators/claims-process.md) covers the auto-inclusion flow from incident detection to settlement.
* [On-Chain Components](/protocol-architecture/on-chain-components.md) describes the Cover Token and Claims Registry contracts.


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