Capital found DeFi long before protection did. DefiLlama tracks around $124 million of onchain cover against $88 billion in total value locked, which leaves the overwhelming majority of the market carrying its own downside. Audits, monitoring, and risk scoring have all matured over the same period, and none of them return capital after a loss. The open question for the next phase is who absorbs the failure when a mechanism breaks.

Losses in DeFi accumulate across four layers: the blockchain, the protocol, the asset, and the strategy. A failure low in that stack propagates upward, so one oracle manipulation can surface as bad debt across several lending markets at once. Audits describe a codebase on a date. Senior tranches redistribute economic loss inside a structure that is still working as designed, which leaves them poorly matched to an infinite mint exploit or a redemption queue that locks users out for three days. Each of those instruments does useful work, and none of them pays a claim.

In this session, Jesus Rodriguez sets out what it takes to make coverage a native layer of that stack. Firelight, incubated by Sentora and built on Flare Network, puts the layer onchain. Stakers deposit into non-custodial cover vaults and hold a liquid token that stays usable across DeFi while it backs coverage. Protocols and vault operators register coverage frameworks onchain and buy cover through an agent, and their premiums flow back to the capital standing behind them. An independent Risk Consortium of GFX Labs, Hypernative, Credora, Native, and Cyfrin reviews each cover event, and approved claims are dispersed programmatically.

The session closes on scope and on measurement. Coverage responds to failures of code and mechanism, including smart contract exploits, oracle manipulation, governance attacks, and bad debt, while ordinary market outcomes sit outside it. Publishing that boundary is what makes protection legible to a risk committee. The measurement shift is the larger one. Total value locked records what a venue attracted, and covered capital records how much of it survives the venue breaking.