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A tokenised repurchase agreement (repo) is a two-part transaction where one party sells a tokenised bond to another and agrees to repurchase it at a later date, typically at a slightly higher price. It is one of the most common instruments in fixed-income markets. KeyStone handles repo as two linked DvP settlements - an opening leg and a closing leg. What happens between legs is not KeyStone’s concern.

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KeyStone’s role in repo

KeyStone settles both legs of a repo. The period between legs - collateral management, yield strategies, rehypothecation - is the counterparties’ business.

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What KeyStone does NOT do for repo

  • Lock collateral for the repo duration (that is lending - Aave Horizon does this)
  • Monitor collateral ratios (that is lending)
  • Handle margin calls (that is lending)
  • Enforce repayment (that is between the counterparties)
  • Liquidate on default (that is between the counterparties)

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Lifecycle

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How Aave Horizon composes

Aave Horizon is a pooled lending protocol for institutional RWA collateral. KeyStone is bilateral atomic settlement infrastructure. They are fundamentally different products that compose naturally:
  • KeyStone settles both legs of the repo (opening DvP and closing DvP)
  • Between legs, the lender optionally deposits the received bond into Aave Horizon to earn yield during the holding period
  • Collateral management (margin monitoring, haircuts, liquidation) is NOT KeyStone’s concern
  • Default enforcement follows the same model as TradFi repo: bilateral legal agreements govern

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Trade types

Settlements carry an optional trade_type field:

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Maturity handling

Maturity is derived from the opening settlement’s repo_terms: it falls tenor_days after the opening settlement is created. When the opening settlement finalizes and maturity arrives, KeyStone automatically creates the closing settlement; the closing payment amount is derived from tenor_days, rate_bps, and the opening payment quantity. Manual trigger: Administrators can trigger maturity early via the admin API:

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Leg reversal at closing

When the closing settlement is created, the legs from the opening settlement are reversed: The closing settlement goes through the full compliance and escrow flow independently. Compliance is re-screened because parties may have been sanctioned between opening and closing.

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Default scenario

If the borrower does not show up for the closing leg:
  • KeyStone records the failed settlement
  • The lender already has the bond (from the opening DvP)
  • Legal recourse governs (bilateral agreement between institutions)
  • Legal agreements between the counterparties handle defaults
A repo is not a single settlement with two phases. It is two independent settlements linked by a parent-child relationship. Each settlement has its own events, its own escrow, and its own compliance checks.