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RedStone Settle provides instant exits for tokenized bonds
RedStone said in a Sept. 1 announcement that its Settle service is being integrated with the NYLIM Anemoy U.S. High Yield Corporate Bond Segregated Portfolio, known by the ticker HYB. Issued through Centrifuge, HYB is the first tokenized fund sub-advised by New York Life Investment Management. NYLIM manages $838 billion in assets, up from the roughly $807 billion reported when the fund was introduced in June.
The integration is designed to let HYB holders, lending protocols, and liquidators sell fund units within one blockchain transaction. A liquidity provider supplies the immediate capital, takes possession of the units, and later completes the fund's regular redemption process. Although RedStone describes the service as T+0 settlement, HYB's underlying redemption period remains T+3. Settle instead transfers the waiting period to an approved liquidity provider willing to hold the units in return for a discount.
A 300-millisecond auction determines the exit price
When RedStone identifies a position eligible for liquidation, the system runs an offchain auction lasting approximately 300 milliseconds, RedStone co-founder and COO Marcin Kazmierczak said. KYC-verified and whitelisted liquidity providers, called solvers, bid according to the discount they require from the HYB reference price. The bid closest to a 0% discount wins, meaning the seller receives the price nearest to the fund unit's calculated value.
Once the auction ends, RedStone combines its latest price update and the liquidation instruction in one atomic onchain transaction. The structure prevents front-running because the price submission and execution happen together rather than through separate transactions. Atomic execution also means every part of the transaction must succeed, or the entire operation reverts. The winning solver has a bonded deposit that can be slashed if it fails to supply the promised capital.
The solver then redeems the acquired HYB units through the issuer's standard T+3 process and keeps the auction discount as compensation for providing immediate liquidity and accepting the redemption delay. No large onchain liquidity pool is required under RedStone's model. Centrifuge and NYLIM also do not need to supply capital for early exits or change the fund's existing redemption operations.
Kazmierczak said tokenization solved issuance but did not solve settlement, and settlement is what defines whether an asset scales onchain with broader utility. Lending market curators need confidence that liquidators can dispose of collateral when a loan becomes undercollateralized. A known exit price and settlement time could allow curators to calculate lending limits without relying on an uncertain redemption queue.
HYB auctions start from administrator-derived NAV
Because high-yield corporate bonds do not trade continuously like cryptocurrencies, the HYB auction will not begin with a price taken from a round-the-clock spot market. RedStone's fundamental price feed will determine the starting value using net asset value data derived from the fund administrator. Solvers then compete by submitting the percentage discount they require to acquire and redeem the units.
The pricing method places the fund administrator's NAV at the center of the auction, while solver bids account for the cost and risk of waiting through the redemption period. RedStone said the structure can also process voluntary redemptions and deleveraging transactions, rather than operating only when a loan enters liquidation. In a stressed market, the auction still requires enough capital from eligible solvers.
Asked what would happen if too few providers participated or no suitable bid appeared, Kazmierczak said prefunded vaults would also join auctions and were intended to keep backstop liquidity available onchain. Continuous and defensible pricing has remained a separate obstacle for tokenized assets used in lending. An August report on Stellar's DeFi gap found that its RWA market had exceeded $3 billion, while pools on Blend that could accept RWAs held only slightly more than $2 million.
HYB moves from issuance to lending collateral
Centrifuge and NYLIM introduced the HYB fund in June, giving eligible investors onchain access to NYLIM's U.S. high-yield corporate bond strategy. Under the original structure, subscriptions and redemptions settle in USDC, while NYLIM retains responsibility for the portfolio, investment process, and risk management. Centrifuge supplies the tokenization and fund infrastructure rather than managing the underlying bonds.
HYB units 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 the conditions attached to HYB apart from unrelated lending pools. The integration could allow an eligible holder to borrow against HYB rather than sell the position, subject to the rules and liquidity of the relevant Morpho market.
Curators could use the auction's settlement terms when deciding how much credit to extend against each unit. In May, Morpho's lending infrastructure expanded to Tempo, where Gauntlet and Sentora introduced curated markets, and RedStone supplied price feeds for stablecoins and tokenized real-world assets. The HYB integration applies the three services of pricing, market curation and lending to a tokenized U.S. corporate bond portfolio. Access will remain permissioned because HYB transfers require approved participants.
