RedStone Instant Exits for NYLIM Bond Fund

RedStone has integrated its Settle service with the Centrifuge-issued HYB tokenized fund, letting holders exit their positions within a single blockchain transaction. The system runs an offchain auction lasting about 300 milliseconds before settling the trade onchain, the company said in a Sept. 1 announcement shared with crypto.news.

HYB, sub-advised by New York Life Investment Management, is the first tokenized fund to use the mechanism. NYLIM manages $838 billion in assets, up from roughly $807 billion when the fund launched in June.

RedStone co-founder and COO Marcin Kazmierczak described the service as T+0 for the holder, but added that the underlying redemption period remains T+3. The delay passes to an approved liquidity provider that buys the units at a discount and waits for the fund's regular redemption cycle.

How the Auction Works

When a position becomes eligible for liquidation, RedStone starts an offchain auction lasting roughly a third of a second. Only KYC-verified and whitelisted liquidity providers, called solvers, can bid. They submit the percentage discount they need from the fund's reference price. The solver closest to a 0% discount wins, meaning the seller gets a price nearest to the calculated net asset value, Kazmierczak said.

RedStone then bundles its latest price update and the liquidation instruction into one atomic onchain transaction. The structure prevents front-running because the price submission and execution happen together rather than in separate steps, Kazmierczak explained.

Atomic execution also means every part of the transaction must succeed or the entire operation reverts. The winning solver posts a bonded deposit that can be slashed if it fails to supply the promised capital, he said.

Once the auction completes, the solver redeems the units through the fund's standard T+3 process and keeps the discount as compensation for providing immediate liquidity and absorbing the waiting risk.

No large onchain liquidity pool is required. RedStone said Centrifuge and NYLIM do not need to supply capital for early exits or change the fund's existing redemption operations.

Solver-Dependent Liquidity in Stress

The model works as long as enough eligible solvers participate. In a stressed market, however, the auction still needs capital from whitelisted providers. Kazmierczak said prefunded vaults will also join auctions to keep backstop liquidity available onchain.

Continuous pricing has been a separate challenge for tokenized assets used in lending. An August report on Stellar's DeFi gap cited by RedStone found that its real-world asset market had exceeded $3 billion while pools that could accept RWAs held only $2 million. Tokenized corporate debt needs pricing systems that account for credit quality, maturity, settlement terms and security structure, the report said.

Kazmierczak said lending market curators need confidence that liquidators can dispose of collateral when a loan becomes undercollaterized. A known exit price and settlement time could allow them to calculate lending limits without relying on an uncertain redemption queue.

HYB will be made available as collateral in markets built on Morpho, a decentralized lending protocol with isolated pools. Each Morpho market can set separate collateral assets, loan-to-value limits, and liquidation parameters, keeping HYB's conditions apart from unrelated pools.

The integration lets eligible holders borrow against HYB rather than selling, subject to the relevant Morpho market's rules and liquidity. RedStone said curators could use the auction's settlement terms when deciding how much credit to extend against each unit.

Access remains permissioned because HYB transfers require approved participants. Kazmierczak said other tokenized funds could use Settle if they support KYC or business-verification whitelists, connect to a reliable NAV feed, and maintain clear redemption terms that let solvers price the waiting period.

HYB enters a tokenized credit market that already includes high-yield strategies from established US investment managers. In August, Securitize launched a separate fund managed with Neuberger Berman investing mainly in high-yield bonds. RedStone supplies pricing infrastructure for that strategy as well.

RedStone cited RWA.xyz data showing tokenized real-world assets above $38 billion in August, up from about $5.4 billion in early 2025. Tokenized US government debt stood at $16.2 billion and tokenized credit at $7.3 billion. More than 1.7 million addresses held tokenized real-world assets in August, a 56-monthly increase, though wallet addresses do not necessarily corresponspond to individual investors.

Citi has projected tokenized assets could reach $5.5 trillion by 2030, while Standard Chartered estimated $2 trillion by 2028. Both remain institutional projections rather than measured commitments.