Tokenization has successfully migrated traditional assets onto distributed ledgers, yet the operational settlement infrastructure of the legacy financial system remains stubbornly attached. New York Life Investment Management (NYLIM), an asset manager with $838 billion in AUM, is attempting to bridge this divide. At the RWA Summit Brooklyn 2026, the firm announced the integration of RedStone Settle for its tokenized US High Yield Bond Fund (HYB).
The HYB fund, launched in June 2026 as a BVI segregated portfolio via Centrifuge, operates on a T+3 settlement cycle. This is standard for high-yield credit, but it creates a structural hard stop for DeFi composability. In a world where onchain protocols expect near-instant liquidity, a three-day wait for redemption renders the asset effectively inert as collateral. The mismatch is stark: the fund is tokenized, but its settlement remains tethered to the speed of traditional finance.
Marcin Kazmierczak, co-founder of RedStone, identified this friction as the primary barrier to institutional adoption. As he noted, “Tokenization solved issuance. It did not solve settlement, and settlement is what defines whether an asset scales onchain with broader utility.” Without a mechanism to collapse this time gap, tokenized assets remain largely static, failing to participate in the automated, high-velocity markets that define the onchain ecosystem.
RedStone Settle addresses this by introducing a Dutch auction mechanism designed to provide T+0 exits. When a holder or a protocol seeks to exit their position, KYC-verified solvers compete in auctions lasting approximately 300 milliseconds to deliver instant stablecoin liquidity in USDC. The solver effectively absorbs the T+3 wait, providing the holder with immediate access to capital at a discount to the fund’s net asset value (NAV). The auctions are anchored to the administrator-derived NAV rather than a continuous spot market, ensuring price integrity. Winning solvers maintain a bonded deposit that is subject to slashing if they fail to supply the promised capital, while prefunded vaults provide backstop liquidity during periods of market stress.
The utility of this system is twofold. First, it enables individual holders to exit their positions instantly. Second, and perhaps more critically for the broader ecosystem, it facilitates T+0 liquidations for DeFi collateral. This is particularly relevant for lending protocols like Morpho, where de-leveraging events require immediate action. By integrating this settlement layer, the HYB fund can function as viable collateral, with a planned HYB-denominated market under the curation of Steakhouse Financial.
The necessity of this integration is underscored by the current state of the market. While tokenized real-world assets have crossed $38 billion onchain, only a fraction of this value is actively deployed as DeFi collateral. The redemption timing mismatch is the primary culprit, keeping billions of dollars in tokenized credit sitting idle. The ability to move these assets efficiently is no longer a luxury.
The infrastructure is already gaining traction. Multiple Morpho curators, including Gauntlet, Sentora, Re7 Labs, and Feather, are already utilizing RedStone. Furthermore, RedStone is providing pricing for other Centrifuge-based funds, such as Janus Henderson’s deJAAA and deJTRSY. This suggests a growing template for how tokenized credit funds will interact with onchain liquidity providers moving forward.
However, the system is not without its caveats. The HYB fund is not offered to US persons, a restriction clearly outlined in its offering documents. Additionally, the model relies heavily on the participation of solvers. To mitigate counterparty risk, winning solvers must maintain a bonded deposit that is subject to slashing if they fail to supply the promised capital. Prefunded vaults act as a secondary backstop to ensure liquidity remains available even during periods of market stress.
As the RWA sector matures, the focus is shifting from the novelty of issuance to the mechanics of utility. The integration of RedStone Settle into the NYLIM HYB fund represents a pragmatic attempt to reconcile the T+3 reality of high-yield credit with the T+0 requirements of onchain finance. This development underscores that the next phase of institutional adoption will be defined by the successful synchronization of traditional settlement cycles with the high-velocity demands of decentralized liquidity protocols.