Railgun develops private DeFi on Ethereum

Railgun, one of the main mixers in the Ethereum ecosystem, is preparing for confidential DeFi. The mixer checks for flagged addresses, but allows all other users to transact with confidentiality.

Railgun is setting the stage for confidential DeFi, obscuring whale moves, lending, or other operations. DeFi remains highly transparent and is used for signals and data, while also exposing high-profile wallets.

The project is preparing for Railgun_connect, the universal DeFi connector for private addresses. Railgun will use 0zk private addresses, which do not appear on the blockchain, but instead use zero-knowledge proofs to ensure validity.

Private addresses are the opposite of readable vanity addresses, completing transactions away from the public ledger and only using Ethereum for security.

Railgun announced it was already testing its confidential infrastructure for CowSwap, one of the most widely used aggregators for DEX. The goal is to make private addresses as functional as public ones.

As of January 2026, the Railgun Private System already holds around $100M in funds, mostly in WETH, USDT, and USDC. Railgun has spread beyond Ethereum, taking up BSC, Polygon, and Solana, with the potential to cover the most liquid DeFi chains.

The native RAIL token is at $2.30, getting a boost from relatively strong usage, as well as the privacy narrative.

Railgun to cover all DeFi activities

Railgun expects to include all types of apps in the Railgun_connect system. Those will include borrowing, lending, swaps, stablecoin staking or liquid staking, as well as general transactions. Currently, an app still needs multiple steps to use a private 0zk address, but Railgun aims to build the feature into protocol frontends.

As a result, users will be able to use the balance in their private wallets, which will be untraceable on the Ethereum L1 chain.

If completed successfully, Railgun can add privacy to all existing apps, liquidity pools, and protocols. Users seeking privacy will not need to bridge funds or use a mixer as an extra step. In theory, all Ethereum-based capital can become private and continue to move privately.

Privacy may make exploit tracking harder

Railgun aims to strike a balance between privacy and protection. The mixer pre-screens some Ethereum addresses, though new exploits can deposit funds before the wallets are flagged.

Railgun is also solving the problem of complex DeFi, especially in terms of collateral and liquidations. To track balances, each confidential address will issue a special NFT that tracks balances and activities.

For all DeFi activity, the special NFT, called Mechs, will interact with the app front ends to execute transactions and liquidations. The process will never expose the actual balance in the confidential address, only taking ZK Proofs from the wallet owner.

For now, the Railgun feature is tested in Terminal Wallet, through the CowSwap frontend. The feature is still far from mass usage, but it may increase DeFi security in the future.