Jack Paul 
Firelight Protocol has raised $8 million to build a protection layer for decentralized finance. The startup plans to expand the assets backing its cover system beyond XRP, with bitcoin and Stellar’s XLM on the roadmap.
The funding round was led by Gumi Cryptos Capital, with Maven 11, Metalayer, Joint Effects and Tribe Capital taking part. Firelight was incubated by Sentora, a DeFi infrastructure provider with $2.4 billion in assets held in its vaults. The protocol and its first cover integrations are expected to launch in September.
Why onchain protection matters
DeFi offers attractive yields, but the risks are real. A single smart-contract exploit can wipe out customer funds. Traditional insurance can take months to pay. Firelight says it is trying to close that gap using dedicated cover capital and a claims process designed to settle eligible losses in around 10 days.
This is not a theoretical issue. DefiLlama data shows that more than $9 billion has been stolen in DeFi protocol exploits over the years. The latest attacks continue to make many mainstream financial firms hesitant about moving money onchain.
The bigger opportunity
Firelight is looking beyond crypto-native traders. Fintechs, neobanks and payments companies are increasingly adding onchain yield products to their apps. The risk of losing customer capital to an exploit can become a major obstacle when a product is ready to go live. Firelight wants to be the layer that makes that step less risky.
CEO Anthony DeMartino said the team is thinking about a wider universe of liquid assets that do not already generate substantial yield. Any asset with good liquidity and no natural yield could eventually be posted as collateral. That approach could expand the cover system far beyond its initial focus on XRP.
He also expects more money sitting in bank accounts to move into fintech earn products powered by stablecoins, onchain vaults and wallets. Sentora is already working on yield products for payroll and remittance platforms, according to the firm.
Despite the promise, the protection gap remains large. Roughly $80 billion is locked in DeFi, but only a fraction of a percent is currently protected by onchain cover. That mismatch is exactly what Firelight is trying to address, and the $8 million raise is only the beginning.