Jack Paul 
Firelight Protocol now covers about $38 million across three DeFi vaults, according to its latest update. The cover is built on Flare Network and backed by staked FXRP, the onchain version of XRP that Flare brings to DeFi. If a defined failure happens, such as a smart contract exploit or an oracle breakdown, payouts are made in USDC.
The three vaults are Kraken’s Protected Strategies USDC vault, plus the USDC Protected and RWA Protected vaults run by Sentora. Sentora acts as the independent curator for the Kraken vault and enrolled it in the program. Kraken itself does not fund or guarantee payouts.
How the cover works
Cover runs in 30-day periods. Stakers who leave early have their stXRP burned and stop earning rewards. Their remaining FXRP unlocks at the end of the next period. Firelight’s independent Risk Consortium decides whether an incident qualifies for a claim. Sentora then distributes any USDC payments to eligible wallets.
Firelight’s first cover went live on October 6, 2026, on Sentora’s USD Protected and Protected RWA vaults. Participants supply FXRP, which is XRP represented on Flare through the FAssets system. The October 15 announcement lists smart contract exploits, oracle failures and redemption failures as covered events.
Kraken vault and payout limits
Firelight announced cover for Kraken’s Protected Strategies USDC vault on October 15. The Defiant reported that onchain records at the time showed $30.5 million of cover for the Kraken-related vault. That figure reflects the launch date, not the current split across the three vaults.
Kraken’s support page says the cost of cover is set by Firelight and Sentora and can change from month to month. The cost is paid out of the vault’s yield. Depositors are eligible for compensation of up to $100,000 per address for each coverage period. The same page states that Firelight coverage is not insurance. Coverage is provided by Firelight and arranged by Sentora, not by Kraken.
Pooled backing and risk
Firelight’s staked capital is pooled across covered vaults. That means a provider earning premiums tied to one vault can take losses from a qualifying incident elsewhere in the portfolio, as CryptoSlate noted. A fall in the XRP price could also reduce available backing. In turn, that may limit how much new cover Firelight can offer.
Validated claims are paid first from Firelight’s stablecoin first-loss buffer. Only the remaining loss reduces the pooled FXRP backing, pro rata across stakers. The setup gives vault users a layer of protection, though it still depends on pooled capital and the price of XRP. I think that tradeoff is the key thing to watch as the cover expands.