Protocol Architecture
This section documents the protocol's components: the on-chain contracts, the off-chain services, and the liquidation pipeline that executes payouts.
What you'll find here
On-Chain Components covers the smart contracts stakers, program operators, and the Risk Consortium interact with directly.
Off-Chain Components covers the services that monitor risk, match orders, and drive liquidation execution.
Claims Liquidation walks through the payout waterfall, liquidation sizing, and post-payout recovery.
A deeper technical treatment of the vault contract surface is maintained separately and will be added once finalized. The MVP-relevant vault model is described in Core Concepts → Vault Architecture.
How the pieces fit together
Firelight separates responsibilities between contracts and supporting services:
Contracts handle things that must be transparent, immutable, or atomic: capacity publication, coverage issuance, the on-chain incident record, vote tallying, slashing instructions, and fund movements.
Supporting services handle things that depend on large data inputs or rapidly changing conditions: real-time risk monitoring, premium pricing, order matching at period boundaries, execution sizing for liquidation, and custody-policy enforcement.
This separation is designed so that anyone reading on-chain state can verify outcomes (coverage active, incidents validated, payouts executed) even though some supporting computations happen elsewhere. Supporting services publish their outputs on-chain where they are material (for example, the Cover Registry's capacity and rates).
Trust assumptions
Smart contracts
Audited and immutable within version bounds
Cover Registry parameters
Produced off-chain, written on-chain. Trust in the off-chain monitoring/pricing services and the authorities that can update the registry
Matching engine
Runs off-chain. Output is visible on-chain (which orders matched at what amounts and premium)
Liquidation service
Runs off-chain with on-chain settlement. Slashed collateral routes into a permissioned execution pipeline
Risk Consortium
Independent of the Foundation and commercial counterparties. Conflicts declared on-chain. 3-of-5 quorum enforced
Foundation
Holds treasury and engages service providers. Does not direct consortium votes or end-user payouts
Where on-chain verification is practical, the protocol uses it. Where it is not (for example, complex risk monitoring), off-chain outputs are signed and written to the relevant contracts.
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