XAO DAO has officially passed Proposal 66, authorizing the organization to deploy 80% of its XRP treasury into Firelight, a decentralized finance (DeFi) protocol specializing in yield generation and decentralized insurance services. Announced by XAO DAO co-founder Santiago Velez, the strategy utilizes Flare Smart Accounts to connect institutional XRP holdings with yield-bearing DeFi applications.
Deploying XRP Treasury to Firelight via Flare Smart Accounts
According to Santiago Velez, the decision marks what is believed to be the first time a decentralized autonomous organization has committed treasury assets to a multichain DeFi strategy combining decentralized insurance with yield generation. Velez expressed gratitude to co-manager Fabio Marzella, Flare Networks co-founder Hugo Philion, the Flare team, and Firelight for developing the underlying infrastructure.
The deployment pathway relies on Flare Smart Accounts, which enable XRP holders to interact with DeFi protocols via a single XRPL signature. Following updates shared on October 6 by Flare and Firelight, users deploying capital connect a supported XRPL wallet to mint and deposit FXRP directly into the Firelight vault. Firelight publicly commented on the integration, posting "So bullish on this."
The treasury allocation comes while XRP trades at $1.34. The token has remained flat over 24 hours, down nearly 4% over seven days, and down over 11% over the past month. XRP is currently 44% lower than its price one year ago and remains 63% below its all-time high of $3.65 recorded in July 2025, even as whales move tens of millions into XRP.
Governance Restructuring and Ecosystem Challenges
The treasury vote follows broader efforts by XAO DAO to expand tokenholder participation. In an October 22 announcement, the organization revealed that multiple governance proposals had passed, alongside the launch of a new community forum. Co-manager Fabio Marzella detailed structural upgrades to the governance application, including discussion tools, searchable records, multi-language support, and tracking for both XRP and RLUSD donations.
These updates build on initiatives outlined in August, which introduced wallet delegation, revised quorum thresholds to minimize inactive wallet friction, and community mini-grants. The changes aim to address long-term operational activity across the broader XRP Ledger ecosystem. Ecosystem sustainability remains a key topic after XRPL infrastructure developer Gen3 announced on August 12 that it would shut down its retail products, Aigent.run and AxiomProtocol, citing high infrastructure costs and limited demand.
Key Takeaways
- Proposal 66 Passed: XAO DAO will move 80% of its XRP treasury into Firelight for yield and insurance.
- Flare Integration: Liquidity moves via Flare Smart Accounts to mint and deposit FXRP into Firelight vaults.
- XRP Market Data: XRP trades at $1.34, down 63% from its $3.65 peak set in July 2025.
- Governance Enhancements: Upgrades track RLUSD and XRP donations, implement wallet delegation, and adjust quorum rules.
Why It Matters
The execution of Proposal 66 represents a structural test for turning stagnant treasury reserves into productive liquidity on cross-chain yield infrastructure. By deploying FXRP via Flare Smart Accounts, XAO DAO is attempting to generate active protocol revenues while hedging against wider ecosystem headwinds, such as Gen3 shuttering Aigent.run and AxiomProtocol. Analysts will be tracking whether the yield generated by Firelight can deliver sustainable returns for the DAO while XRP remains 63% off its $3.65 record high.
