RedStone, a modular oracle infrastructure provider, has launched RedStone Settle, a new settlement layer. This innovation allows tokenized real-world assets (RWAs) to be utilized as collateral in decentralized finance (DeFi) lending protocols.
The RWA sector has surpassed $30 billion, but faces a critical challenge: DeFi's need for instant liquidation versus the long redemption timelines (60-180 days) of real-world assets. This structural mismatch has hindered RWAs from being reliably integrated into permissionless lending markets.
RedStone Settle addresses this by facilitating on-chain auctions and engaging liquidity providers. When an RWA-backed position requires liquidation, an immediate auction is triggered. Liquidity providers can then purchase the position instantly, providing T+0 liquidity to the lending protocol, even if the underlying asset's redemption takes significantly longer.
According to RedStone's CEO, this new layer enables RWAs to function as collateral within DeFi systems, mirroring their use in traditional secured lending, without exposing protocols to unmanageable redemption risks.
Symbiotic, a collateral-as-a-service protocol supported by Paradigm and Pantera Capital, is the first integrated liquidity partner for RedStone Settle. This integration allows lending markets to maintain the speed and reliability expected when using crypto-native collateral, paving the way for seamless RWA integration into DeFi.