Firelight's XRP-Linked Protocol Aims to Generate Income with 30-Day Coverage Periods

XRP holders may be able to earn a new source of income through Firelight's protocol, which lets them deposit XRP-linked assets into a vault and receive stXRP representing their position. The deposited FXRP will then be used to back coverage sold to DeFi protocols, generating income for the holders supplying the collateral.

However, there is a trade-off: getting the collateral back could take up to 60 days, depending on when a holder asks to leave. Withdrawal rules say that current one-day periods produce a withdrawal wait of roughly one to two days, but once the protocol introduces 30-day coverage periods, the same process would extend that wait to just over 30 days and nearly 60 days.

Firelight has already attracted $71.74 million in XRP-linked capital ahead of its transition to Phase 2, which will introduce coverage periods. The current total value locked (TVL) in Firelight is displayed on DefiLlama, but this figure measures FXRP held in the vault, not the amount of protection sold or premiums customers have paid.