Off-Chain Components
Not everything Firelight does can happen on-chain. Real-time risk monitoring, premium pricing, order matching, and liquidation execution all require data inputs, computation, or external venues that smart contracts cannot access directly. This page covers the off-chain services and how they interface with the on-chain contracts.
Service summary
Risk Monitoring Service
Continuously monitor risk components for each approved market
A live risk view per market
Pricing Service
Translate the monitored risk view into base premium rates and available limits
Parameters written to the Cover Registry
Order Matching Engine
Allocate coverage capacity at period boundaries
Matched orders, premium pulls, Cover Token issuance
Payout Calculation Service
Compute payouts for validated incidents
Slash instructions
Liquidation Execution Service
Convert slashed collateral into payout stablecoins
Payout stablecoins distributed to Program Operators
Monitoring and Alerting
Detect exploit incidents and protocol stress
Alerts, watchlist updates, exploit reports
Risk Monitoring Service
The Risk Monitoring Service implements the continuous monitoring described in Risk Pricing Framework, Technical Scoring, and Economic Model. It ingests on-chain data, public audit reports, incident data, and market data. It maintains a live risk view per market and flags markets approaching exclusion thresholds for Risk Committee review. Its outputs feed the Pricing Service and are retained for transparency and calibration.
Pricing Service
The Pricing Service converts the monitored risk view into the on-chain parameters published to the Cover Registry: the base premium rate and the available limit per protocol. It operates under access control, updates to the Cover Registry require signatures from authorized roles and are subject to governance review. Because the underlying risk view is monitored continuously, each period's published rate reflects the latest conditions rather than a stale snapshot.
Order Matching Engine
The Order Matching Engine runs at each period boundary and implements the two-queue priority system described in Periods and Coverage Cycles:
Calculate available capacity (First-Loss Buffer + staked collateral value × effective leverage, minus active coverage, minus renewal commitments, plus unstake releases).
Process the renewal queue first. Pro-rate if demand exceeds capacity.
Process the new-order queue with remaining capacity. Pro-rate if demand exceeds capacity.
Pull premiums from prefunded wallets via approvals (partial matches pull proportionally).
Route settled premiums to the Fee Distributor.
Issue Cover Tokens for matched orders.
Refund unmatched premiums.
The engine will not allocate capacity that would drop the Capital Adequacy Ratio below its floor.
Payout Calculation Service
When the Risk Consortium validates an incident, this service produces the slash instruction the Claims Registry executes: it determines available payout capacity (First-Loss Buffer plus the market value of staked assets, measured at settlement), computes per-enabled coverage payouts (full if within capacity, pro-rata otherwise) across the auto-included set, and accounts for concurrency guards if another slash is in flight on the same vault.
Liquidation Execution Service
Once collateral is slashed, this service converts it into the payout stablecoins preferred by each Program Operator, using execution strategy scaled to claim size, exchange execution for smaller incidents, OTC and syndicated unwinds for larger ones. It uses regulated venues and counterparties and tracks the slashed collateral value and the realized liquidation proceeds separately.
Monitoring and Alerting
Continuous monitoring watches for incidents that could result in claims or threaten solvency.
Critical security alert
Active exploit or critical vulnerability disclosed
TVL decline
Sharp drop over a short window
Governance change
Material parameter change or admin-key rotation
Audit finding
New critical or high-severity finding
Oracle deviation
Price deviation beyond reference thresholds
Markets showing concerning indicators are placed on a watchlist: new-coverage capacity freezes, monitoring frequency increases, and risk review is triggered if the status persists.
Where to read next
On-Chain Components for the contracts these services feed into.
Claims Liquidation for the full payout pipeline.
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