Firelight Raises $8 Million for DeFi Cover and Bitcoin
The onchain protection layer is meant to cover smart contract risks in DeFi faster, with plans for XRP, bitcoin, and XLM. The first launch and cover integrations are scheduled for September.
Key Takeaways
- Firelight Protocol raised $8 million to build an onchain protection layer for DeFi.
- The cover system starts around XRP and should later expand to bitcoin and Stellar's XLM.
- The first launch and cover integrations are scheduled for September.
Firelight Protocol has raised $8 million (€6.9 million) to build out an onchain protection layer for DeFi. The crypto company wants to set up its cover system not only around XRP, but later also expand it to bitcoin and Stellar's XLM. The first launch and cover integrations are scheduled for September.
New Layer for DeFi Risk
The round was led by Gumi Cryptos Capital, with participation from Maven 11, Metalayer, Joint Effects, and Tribe Capital. Firelight was incubated by Sentora, a DeFi infrastructure provider with $2.4 billion (€2.1 billion) in assets in its vaults.
The core of the project is simple: DeFi can offer attractive returns, but a smart contract exploit can hit customer funds all at once. Traditional insurance can then take months, while Firelight says it wants to handle claims in about 10 days. According to the company, that matters now that fintechs, neobanks, and payment companies are increasingly adding onchain yield products to their apps.
Why This Matters
Firelight says about $80 billion (€69 billion) is locked in DeFi, while only a small part of that has onchain cover. That shows how big the gap still is between exploit risk and the protection available. In the broader market, that need is also clearly growing: the DeFi insurance market expanded sharply in 2026 and claims rose significantly in the first quarter.
The project wants to tie that protection to an NFT that represents a covered position. After an exploit, the holder can submit it to a group of independent risk firms, including GFX Labs, Hypernative, Credora, Native, and Cyfrin. That group is supposed to decide within three to four days whether an incident falls under the coverage, after which Firelight is aiming for payout in less than 10 days.
More Collateral in Sight
Firelight is also looking at a broader group of liquid assets that do not generate much yield on their own. CEO Anthony DeMartino said that in the future, more assets could be accepted as collateral, as long as they are sufficiently liquid and do not have their own natural yield. The new capital will go toward protocol development, expanding the cover offering, and more ecosystem partners.
