New York Life taps RedStone to speed up tokenized fund redemptions

New York Life Investment Management (NYLIM) is adopting RedStone Settle to provide instant liquidity for its Centrifuge-tokenized US High Yield Bond Fund, a move aimed at addressing one of the biggest limitations of bringing traditional assets into DeFi.

NYLIM manages $838 billion and launched HYB as its first tokenized product. The fund replicates its existing US high-yield corporate bond strategy onchain, with investors subscribing and redeeming in USDC. While the tokenized wrapper changes how investors access the fund, the underlying portfolio and risk-management process remain the same.

HYB’s traditional redemption process remains T+3, creating a mismatch with DeFi markets. Because the fund ultimately has to sell bonds to meet redemptions, an investor seeking to exit can wait several business days for cash. DeFi applications, by contrast, generally require collateral to be liquidated immediately when positions become undercollateralized.

NYLIM looks to bridge that gap with the integration of RedStone Settle. Its Dutch auction system lets KYC-verified solvers compete to supply liquidity upfront. According to RedStone, the solver receives the HYB position and waits for the fund’s normal redemption, while the investor receives USDC at T+0. Settlement occurs atomically in less than a second.

The system also makes HYB more viable as lending collateral, RedStone noted. If a borrower using HYB falls below a liquidation threshold, a DeFi protocol can use RedStone’s solver network to exit the position immediately rather than waiting for the fund’s three-day redemption. The mechanism can also support partial liquidations and deleveraging.