Railgun is a smart contract system that brings Zero-Knowledge Privacy to on-chain decentralized applications (dApps) within the Ethereum, BSC, Polygon, and Arbitrum ecosystems. ^[1][2]

Overview

Railgun is an interoperable ZK privacy framework and DeFi toolkit for transacting and using DeFi on public blockchains privately empowering a rich on-chain Zero-Knowledge privacy ecosystem. Railgun is compatible with existing EVM dApps, chains, and liquidity and live on Ethereum, BSC, Polygon, and Arbitrum^[2].

Railgun was founded in January 2021. It aims to secure DeFi trading and lending activities on the Ethereum network. The smart contract-based system offers privacy without the need for any token bridges or layer-2 scaling solutions to perform any transaction or smart contract interaction.^[8]

Privacy System

In blockchain transactions and transfers that are publicly visible, there are typically four key elements: sender, receiver, the name of the asset being sent, and the quantity of the asset. To achieve privacy, it is necessary to anonymize these four pieces of information. Railgun accomplishes this by using private balances to protect transaction information within the system. These private balances consist of anonymous funds and users, which remain anonymous to outside observers.^[10]

Tech

Railgun leverages zk-SNARKs technology to encrypt wallet balances, transaction history, and other details to ensure that users can use a public blockchain like Ethereum with all its benefits while remaining completely private or hidden. With zk-SNARKs, the user can prove to the blockchain that they have the right to spend the tokens in their wallet privately. ^[1]

Railgun takes advantage of a new kind of zero-knowledge proof wallet technology called 0zk address, which secures your wallet information in such a way that it can only be spent and viewed with your private key. ^[1]

Railgun can be used by sending any ERC-20 standard token to your private balance and then moving these tokens out to any DeFi platform for swaps, yields, or trade. User's privacy is underpinned by Railgun’s zk-SNARK technology, giving user's complete control over the privacy of his/her funds. ^[8]

Components

Railgun Integrated Wallets

The Railgun smart contracts can be integrated into any new or existing Ethereum/EVM wallet quickly and easily with the Railgun Wallet SDK. An integration featuring 0zk addresses, shielding, and private DeFi requires minimal development overhead.

Following are some of the frontend wallets and EVM wallets built by separate independent community developers through which users can also use the Railgun protocol.

• Railway Wallet: Railgun integrated wallet available on web, desktop, iOS, and Android. Features include an easy-to-use UI and mobile versions as well as a full suite of private DeFi apps including swaps and yield.^[4]
• Terminal Wallet: An open-source command line interface (CLI) wallet with primarily keyboard-based controls. Available on Linux, Windows, and macOS with Railgun-powered privacy features like shielding, private swaps, and private transfers.^[5]
• TokenShielder: Frontend for shielding assets from any Ethereum/EVM wallet. Simply connect the user's browser wallet like MetaMask, enter any 0zk address, and shield away. Useful for receiving payments directly to the user's Railgun private balance from the wide world of Ethereum/EVM.^[6]

Developer Tools

TypeScript SDKs for building Railgun privacy into existing/new wallets or a privacy-enabled dApp.
Users create a non-custodial Railgun Wallet with a private zero-knowledge address(0zk). Any ERC-20 token or NFT can be shielded into a 0zk address of the user's choice. Once shielded, tokens, balances, and transactions are encrypted. Users can transfer assets between 0zk addresses and engage in DeFi activities amorously.^[7]

Vitalik Buterin on Railgun

Buterin has underscored the critical role of privacy in cryptocurrency transactions, particularly following revelations that he has utilized the privacy-focused tool RailGun to conceal his transaction details. Vitalik has actively engaged with RailGun, evidenced by a 100 ETH transfer, and his endorsement and active use of RailGun led to a significant increase in RAIL's value.

Vitalik Buterin expressed his support for the project’s use of the Privacy Pools protocol in one of his tweets:

Privacy is normal. Railgun uses the privacy pools protocol which makes it much harder for bad actors to join the pool without compromising users' privacy.^[3][9]

Buterin’s endorsement came at a time when privacy tools were under increased scrutiny from regulators globally. In April 2024, the US Treasury Deputy Secretary highlighted malign actors’ potential misuse of privacy-enhancing technologies. In response, major exchanges like Binance and OKX have begun delisting such assets, aligning with tighter regulatory frameworks.^[9]

Issues and Controversies

Railgun Defends From Crypto Laundering Allegations

On April 16, 2024, the crypto news platform Wu Blockchain highlighted the alleged links between the privacy protocol and the North Korean hacker group Lazarus Group. The post affirmed that Lazarus Group “is also a user of the coin mixer Railgun”. Moreover, the news platform pointed out that in January 2023, the US FBI claimed over $60 million worth of stolen ETH was laundered through Railgun. Additionally, the post stated that the privacy protocol became the “main alternative” after the Tornado Cash sanctions. Railgun shut down Wu Blockchain’s claims, deeming them “not true and false reporting.”

The post stated the news was “a mistaken, false allegation in the first place”. However, they clarified that the Lazarus Group is blocked from using the protocol’s system due to the “Private Proofs of Innocence” (Private POI). The Private POI tool was implemented a year ago and gives “cryptographic assurance that funds entering the Railgun smart contract are not from a known list of transactions or actors considered undesirable by respective wallet providers.”^[3]