Introduction

This section introduces Firelight Coverage: what it is, who participates, the problem it addresses, and a one-page walkthrough from cover enablement through payout.

What is Firelight Coverage

Firelight Coverage is an on-chain protection layer for DeFi positions. A program operator running a vault for end users can enable cover made available through Firelight on that vault. If a qualifying incident occurs, the protocol can pay the program operator in stablecoins, and the operator may distribute that payout to affected depositors under the vault's terms.

Cover is backed by deployed capital in the Firelight protocol. Stakers stake FXRP into Firelight and earn base rate emissions plus protocol rewards tied to coverage activity. Incidents are validated by an independent Risk Consortium against published coverage criteria. The Firelight Foundation stewards the protocol and holds protocol treasury.

Firelight Coverage is not insurance. It does not create a contract of insurance with Firelight, the Foundation, or a vault depositor. It is a protocol-based coverage mechanism that a program operator elects on the vault they run.

Who participates

Firelight has a layered participant model:

• Stakers supply backing capital. Staking is permissionless, and anyone can stake FXRP and earn a share of network emissions.

• Program operators enable cover on the vaults they run. They hold the on-chain Cover Token, receive payouts directly and programmatically from the protocol, and may distribute payouts to their vault's depositors subject to the vault's terms. In the MVP, enabling cover is permissioned to institutions that complete onboarding (AML/sanctions screening and eligibility checks).

• End users deposit into a program operator's vault. They benefit from any payout the program operator distributes under that vault's terms and conditions. They do not interact with Firelight directly.

• Curators design the vault strategies that program operators offer. They can be the same entity as the program operator or a distinct partner. The curator role also extends to the incident lifecycle, where the protocol's designated curator opens incidents on-chain and prepares the proposed loss schedule for consortium validation (see Claims Process).

• The Risk Consortium is an independent group of confirmed security and risk specialists that validates incidents against coverage criteria and signals the protocol.

• The Firelight Foundation stewards the protocol, holds protocol treasury, and engages the consortium and service providers.

What this section covers

• The Problem describes why DeFi needs a native coverage primitive and why this model is distinct from insurance.

• How Firelight Works walks through the personas and the full enablement-to-payout flow on a single page.

Where Coverage fits in the protocol

Coverage is the feature-complete phase of Firelight. It builds on the same staking and vault primitives used in Phase 1, extending them with:

• A permissioned cover-enablement flow for institutional program operators

• Network emissions from protocol revenue earned by stakers

• An on-chain claims and payout process that pays the program operator directly

• A risk and pricing framework that monitors risk components in real time to set capacity and premiums

Until the feature-complete launch, coverage-related features described in this section are upcoming. Parameters and thresholds shown are target values and may be adjusted prior to launch.