Kraken integrates XRP-backed DeFi protection via Firelight

Kraken has expanded its DeFi Earn service to include onchain protection for its Protected Strategies USDC vault through the Firelight coverage protocol. Operating on the Flare Network, Firelight uses a shared pool of staked FXRP—a programmable version of XRP—to provide coverage against eligible losses such as protocol failures and exploits.

Under this arrangement, arranged by the vault curator Sentora, payouts for eligible losses are capped at $100,000 per address. The integration allows XRP holders to earn fees by providing collateral to the Firelight pool, though they assume the financial risk of qualifying losses.

For Kraken users, the protection comes at the cost of a lower investment yield, as the published annual percentage yield already accounts for the coverage fees. Kraken has stated that it does not arrange or guarantee these payouts, nor does it receive the coverage fees.