Firelight Protocol May Let XRP Holders Earn Income, But at a Cost
XRP holders may be able to earn new income through Firelight's protocol, but doing so comes with the risk of losing some of their collateral. The protocol uses XRP-linked assets on Flare as capital for a DeFi coverage business, where customers pay premiums for protection sold to DeFi protocols. The deposited FXRP is used to back this coverage, and holders can earn income tied to the premiums paid by customers.
The trade-off is that getting the collateral back could take up to 60 days, depending on when a holder requests withdrawal. This is because claims may still arise from the period when their money was backing coverage, and the withdrawal process takes time to complete.
Firelight has already attracted substantial XRP-linked capital, with $71.74 million in total value locked as of September 13th. However, deposits show how much capital is available to back coverage, not whether the business can generate enough income to make the risk worthwhile for depositors.