VERIFIEDBy Xavier Rivera· ·1 min read
RedStone launches settlement layer for RWA DeFi lending
RedStone launches RedStone Settle, a settlement layer to enable tokenized RWAs as DeFi lending collateral by bridging fast liquidations and slow redemptions. It introduces onchain auctions for liquidity providers and could unlock over $30 billion in idle assets.
Source:CoinTelegraph
TL;DRAI · 60 sec read
RedStone, a decentralized oracle provider based in Baar, Switzerland, launches RedStone Settle, a new settlement layer for decentralized finance.
The system addresses a mismatch in DeFi lending: platforms like Aave use near-instant liquidations for risk management, but tokenized real-world assets (RWAs) such as funds and bonds have redemption periods of 60 to 180 days, preventing their use as collateral.
RedStone Settle introduces an onchain auction mechanism triggered during liquidation events. Liquidity providers purchase positions immediately, supplying protocols with liquidity while assuming the delayed redemption risk of the underlying assets.
RedStone states the layer could unlock more than $30 billion in tokenized RWAs currently idle in DeFi, aligning with RWA.xyz estimates of over $30 billion in RWAs excluding stablecoins, led by US Treasury exposure and private credit.
The launch occurs amid debate on tokenization's liquidity benefits. Oya Celiktemur of Ondo Finance said at Paris Blockchain Week, hosted by Cointelegraph, 'I think there’s still this idea that tokenizing something illiquid will somehow magically make it a liquid asset, which is just not true.' Binance Research notes DeFi lending grew 72% year-over-year through September.
The system addresses a mismatch in DeFi lending: platforms like Aave use near-instant liquidations for risk management, but tokenized real-world assets (RWAs) such as funds and bonds have redemption periods of 60 to 180 days, preventing their use as collateral.
RedStone Settle introduces an onchain auction mechanism triggered during liquidation events. Liquidity providers purchase positions immediately, supplying protocols with liquidity while assuming the delayed redemption risk of the underlying assets.
RedStone states the layer could unlock more than $30 billion in tokenized RWAs currently idle in DeFi, aligning with RWA.xyz estimates of over $30 billion in RWAs excluding stablecoins, led by US Treasury exposure and private credit.
The launch occurs amid debate on tokenization's liquidity benefits. Oya Celiktemur of Ondo Finance said at Paris Blockchain Week, hosted by Cointelegraph, 'I think there’s still this idea that tokenizing something illiquid will somehow magically make it a liquid asset, which is just not true.' Binance Research notes DeFi lending grew 72% year-over-year through September.
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