RedStone Unlocks Stalled RWA Collateral with New Liquidation Product
RedStone, a Swiss-based oracle provider, has launched a new liquidation product called RedStone Settle to address a major flaw in tokenized Real-World Assets (RWA) collateral. The platform aims to unlock approximately $30 billion worth of currently idle tokenized assets that cannot be efficiently used as collateral due to their redemption timelines.
The problem lies in the fact that RWA tokens have redemption windows ranging from 60 to 180 days, making it challenging for DeFi lending protocols to liquidate them instantaneously. This is in contrast to native cryptocurrencies like Bitcoin and Ethereum, which can be sold on-chain in a single block.
RedStone Settle operates through an auction-based mechanism built on the company's Atom architecture. When a position backed by RWA collateral hits its liquidation threshold, Settle triggers an instant on-chain auction. KYC-verified solvers compete to provide liquid assets in an atomic on-chain transaction, with the winning solver delivering cash or cash-equivalent tokens to the lending protocol immediately.