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Tokenized stocks may be getting much of the attention right now.

But fixed income could offer one of the most practical use cases for bringing traditional assets on chain.

And it comes down to collateral.

Institutional traders regularly have to post collateral against their positions.

And as GSR Managing Director Andy Baer points out, ideally that collateral is still earning a return while it's being posted.

That's where tokenized treasuries and money market funds come in.

Baer argues they could allow investors to earn a treasury-like return on collateral while making it easier to move that collateral more frequently, something that becomes increasingly important as markets move toward 24-7 trading.

If existing traditional exchanges started to accept not only stablecoins, but tokenized money market funds or tokenized treasury funds, as good collateral, then all of a sudden you can solve one of the most kind of big scale latencies of traditional markets, which is the fact that these collateral and variation margin payments are only made a couple of times a day and only on weekdays.

So improving that would improve risk management dramatically, and it would enable really clean weekend trading.

The idea is pretty straightforward.

If trading happens over the weekend, the infrastructure supporting those trades needs to keep up.

Baer says that could also help address what traders know as weekend gap risk when major news breaks while some traditional markets are closed and prices have to absorb that information when trading resumes.

And as more trading becomes automated, the case for keeping the underlying collateral infrastructure running becomes even stronger.

You can't have trading resume or continue over weekends without variation margin events happening as well.

So the question of collateral movement is never very far away.

And if you can't utilize the yield mechanisms over the weekend because banks are closed or treasuries don't trade, then that sort of compromises that weekend collateralization So 24-7 and tokenization really go hand in hand in terms of shortening that window of collateral movement and enabling lower risk trading overall.

And that's what makes fixed income an interesting part of the tokenization story.

The goal isn't simply to put a treasury or money market fund on chain.

It's to potentially make those assets more useful as collateral in markets that increasingly operate outside traditional trading hours.

For Bayer, the opportunity is ultimately about making collateral movement more frequent, keeping that collateral productive, and reducing risk as trading moves closer to an always-on model.

That's a wrap for this week's Brand New Rails.

We'll see you next week as we continue to explore how blockchain technology is reshaping capital markets, liquidity and investment opportunities.