You Know Zcash, But Railgun Lets You Use Any Asset Privately Across All Ethereum DeFi

Summary

• Railgun researcher Alan pitches the protocol as “the incognito mode for Ethereum”: a suite of smart contracts creating a private address standard — the Zcash-style shielded side of Ethereum — deployed on Ethereum, Base, Arbitrum, Polygon, and BSC, with roughly $117M TVL cited on DeFiLlama. The research agenda is “how do you make it do everything that a public address can do” — tapping the EVM economy “without doxing your wallet.”
• Nomatic distinguishes Railgun from mixers: mixers break chain of custody with fixed denominations and work poorly for “novel balances,” NFTs, and varied shitcoin portfolios, while Railgun is a lockbox inside a safe where you prove with zero knowledge that you have the right to spend. Alan says the goal is “for it to be a true wallet you can trust, with privacy, where you can put all your tokens and transact from them forever.”
• The #1 use case is payments, not trading — consolidating 20+ wallets, paying into CEX or Hyperliquid accounts, and using payment links to private addresses — and Alan says the privacy set is very high for ETH and stablecoins but can be weak for long-tail tokens due to a cold-start problem. DeFi access depends on wallet choice (Alan says Anon has the most: Morpho, Hyperliquid, fxUSD, Beefy); Railgun Connect is research toward connecting balances to arbitrary DeFi mechanisms, not a do-it-right-now feature.
• Alan’s hot take is that the privacy that matters is wallet-side actor blinding, while dApp-level privacy threatens DeFi’s core auditability. The target UX is a Visa terminal that just says “Approved” — “none of their business” — but black-box dApps make it harder for ordinary users to verify Aave LTVs or vault behavior, and FHE verification is “an equal trust-me-bro kind of statement… I have to trust a nerd.”
• On the Zcash valuation disparity, Alan reframes the question around proximity to economic activity: Zcash today is “primarily for ZEC” and sits “at arm’s length” from Uniswap, CoW Swap, vaults, and stablecoins — activity he wants to participate in. He says NEAR’s tie-in has reduced that distance somewhat, but “I want my privacy mechanism to be on Ethereum”; he has used Zcash and dug out old seeds when its price moved.
• Alan sees the Ethereum Foundation’s Kohaku work as complementary, not competitive: projects built with the Kohaku SDK are beginning to integrate Railgun contracts, and he thinks Ambire will release a Railgun-integrated wallet soon. He sees default privacy arriving as a stack, not a switch: mempool privacy and RPC privacy (he thinks the EF research is called AnonRPC) may become easier and more widespread, while Railgun remains a toggleable incognito layer. “Privacy isn’t about hiding everything”; it is about “self-selecting what you reveal to the world.”
• RAIL’s utility is security governance: staking contracts hold “70-plus percent” of total RAIL, and stakers review upgrade proposals (such as the Base deployment) as “guardians of the Railgun ecosystem.” Transaction fees fund rewards from the treasury, distributed every two weeks; Alan thinks the year will end with just over $2M in rewards to active stakers. Alan also teased a part two on post-quantum privacy.

Deep dive

1. Six years of privacy slog started with a stranger reading his Etherscan

• Alan’s origin story: trading in Telegram groups, he was asked about a position he had not shared — “you have the Collab.Land token, and you’ve talked about this trade and that trade… and that’s your wallet, right?” — and was shown his own Etherscan. His progression thesis: “you start to self-custody… and then maybe after self-custody comes privacy.”
• The elevator pitch: Railgun is a suite of smart contracts creating a private address standard — like Zcash’s public/private split, “Railgun is handling the private side of Ethereum.” You generate a private address from your seed and use it like a 0x address; the research question is how to make it do everything a public address can, “without doxing your wallet” — “the incognito mode for Ethereum.”
• DeFi Dad’s motivating examples: realizing he had transacted from an ENS-labeled wallet and worrying about wallet exposure through data breaches at exchanges, accounting firms, and Web2 entities.

2. Not a mixer: a lockbox in a safe, spendable by ZK proof

• Nomatic explains that mixers aim to break chain of custody between addresses using fixed denominations — he recalls Tornado Cash denominations of 0.1, 1, 10, and 100 ETH — and says mixers work poorly for NFTs, varied shitcoin balances, or novel amounts such as 13.243 ETH. “Apples and oranges are both fruit… I believe fruit can be compared” — similar in some ways, but mechanically very different.
• Nomatic’s analogy for Railgun is a safe with a lockbox: it can hold assets such as USDC, ETH, or DAI. Alan adds that CryptoDickbutts are another example of what someone might put in, and that mechanically “you’re doing a zero-knowledge proof that you have the right to spend from your lockbox.”
• What Etherscan shows after shielding: a public address has put funds into Railgun; whether they went to that user’s private address or paid someone else “is left to interpretation.” From there, users can transact through CoW Swap or 0x, or use integrated wallets (Railway, Anon, Terminal, RailOxide) and WalletConnect apps such as Faceless and Token Shielder.

3. Payments are the killer app; DeFi access depends on your wallet

• Alan’s ranking: “the number one thing that’s happening with Railgun is payments” — consolidating the 20-plus wallets many crypto users have kept separate into “one nice balance,” paying into CEX or Hyperliquid accounts (“because they want to go long XPL or something”), and using payment links to a 0zk address. The driver: people “judge you on Etherscan after you give them an address.”
• The contracts themselves “don’t really care what other smart contracts you interact with,” but today DeFi is a curated, wallet-level experience. Alan says Anon has the most features: deposits into Morpho vaults, seeding and re-shielding Hyperliquid balances, swaps via Uniswap/0x/aggregators, minting fxUSD from shielded ETH, and Beefy farming.
• The open research: Railgun Connect is designed to connect a Railgun balance to DeFi mechanisms. Alan says the team is working on making this seamless and that it is tricky; he imagines AI could enable an agentic experience, but calls that “a ‘soon™,’ not a do-it-right-now kind of thing.”

4. Privacy sets, ~$117M TVL, and “a state machine on a state machine”

• Alan says privacy is “very high for a certain subset of tokens — stablecoins and ETH.” Shielding an obscure token like Artificial Inu would likely mean a weak privacy set because few people may have used it: a per-token cold-start problem. His example: $80M of ETH in Railgun could give his “peasantly $150” a strong privacy set; if a token has $300 in it and he deposits $80,000, he may be assumed to be the actor.
• TVL is public: Nomatic cites about $117M on DeFiLlama, and Alan says Etherscan showed around $120M on Ethereum at that point, with ETH, USDC, DAI, USDT, and other tokens. Internal flows aren’t visible: if Alan sends DeFi Dad 100 ETH inside Railgun, “the only thing that you see is a state update on Ethereum.”
• On whether Railgun is an L2: Alan says it is “basically a state machine on a state machine,” but not technically an L2. He says it has censorship-resistance and immutability properties an L2 won’t have, noting that some L2s can be shut down or have their sequencer paused.

5. The NEAR freeze: a host’s discomfort, and Alan’s line between CeFi and DeFi

• Nomatic recalls that, during what he thinks was the Bitget hack, NEAR stopped some funds from being moved; he estimates the amount at about $49M. Alan says the capture rate was over 90%. Nomatic expresses mixed feelings: “on one hand… screw those hackers. On the other hand,” it raises concerns that a protocol can step in and act.
• Alan’s response: “I hate a thief. I don’t like criminals, dude” — and NEAR is a centralized bridge, “you’re going through Jim Bob’s S3 bucket probably,” so he thinks intervening was the right thing to do. The error, he says, is conflating all DeFi: he does not want that kind of mechanism in DeFi, but thinks it is fine for centralized services.

6. Versus Zcash: Railgun lives where the economy is

• Alan acknowledges the lineage: Railgun is “effectively a Zcash-style shielded mechanism for Ethereum,” borrowing concepts such as shielding. The difference: Zcash as it exists today is primarily for ZEC, while Railgun is designed for ETH, USDT, DAI, and stablecoins — because people commonly send stablecoins.
• Nomatic asks about the price disparity, given Railgun’s usability. Alan reframes the answer as why Railgun exists: Zcash and Tornado Cash were already there in 2020, but Zcash was “at arm’s length from all the cool things that I’m doing” — Uniswap, Curve, CoW Swap, vaults, and staking. NEAR’s tie-in has reduced that distance somewhat, but Alan still wants his privacy mechanism on Ethereum.
• Alan says he has used Zcash and, when its price started moving, dug out old seeds to see what was there. He also notes that Zcash shielded-asset research could be interesting.

7. The hot take: privacy belongs in wallets; transparency belongs in dApps

• Alan’s framing: what matters is wallet-side “actor blinding.” Etherscan voyeurism — “oh, he uses Kraken… oh, he got this airdrop… oh, he has a Milady” — can seem cute, but is “broadly bad for the ecosystem.” The target UX is a Visa terminal: it says “Approved,” you get your coffee, and “they don’t get to judge you or say, ‘I see you’re late on your mortgage.’ They have no idea. It’s none of their business.”
• His counter-position on dApp-level privacy: ordinary users should be able to check Aave’s loan-to-value, a vault’s payouts, or whether something is controlled by a multisig. Black-box dApps make that harder, and FHE verification “adds a certain trust element… I have to trust a nerd.” “‘Trust me, bro, I’m a mathematician’ is an equal ‘trust me, bro’ kind of statement.”
• His regulatory analogy: imagine needing “crazy encrypted computation” to review a company’s 10-K — “the SEC would be like, ‘Nah. We’re not doing that. We’re not playing that game here.’” He is not sure DeFi should do that either, at least not yet.
• The hosts discuss DeFi’s transparency by comparing it to a Venmo payment exposing someone’s financial history. Nomatic admits he has looked at other people’s wallets, including those of friends and investors whose success he admires, underscoring that this voyeurism is not hypothetical.

8. Kohaku, the privacy stack, and a RAIL token that’s 70% staked

• On fears that the EF is competing with Railgun, Alan says the work is complementary. Contributors include Chainway (Turkey), which helped write Railgun’s private proof-of-innocence mechanism, and ZKNOX (France), which wrote hardware support. Alan says projects built with the Kohaku SDK are beginning to integrate Railgun contracts; he thinks Ambire will release a Railgun-integrated wallet soon.
• Will privacy be default? Alan’s answer is “yes and no”: privacy is a stack, like browser security — the “S” in HTTP was not as ubiquitous in the period from 1994 to about 2016, followed by optional incognito mode and VPNs. He expects mempool privacy to become standard, saying he is “sick and tired of feeding Jared from Subway” through front-running and sandwiching. He also expects RPC privacy to become easier and more common; he thinks the EF research is called AnonRPC and says it can pass RPC calls over Tor. He says institutions want and need this. Railgun would remain an optional incognito layer: “privacy isn’t about hiding everything. To me, it’s more about self-selecting what you reveal to the world.”
• RAIL mechanics: staking contracts hold “70-plus percent” of total RAIL. Stakers review upgrade proposals — most recently, whether to deploy Railgun on Base — and check that a deployment is not backdoored. Alan says treasury fees taken in basis points from transactions fund rewards every two weeks, and thinks the year will end with just over $2M in rewards to active stakers.
• The close: Alan describes Railgun as a decentralized project seeking builders through its SDKs, including Railgun Community, Railgun Reloaded, and Kohaku, and points privacy-curious listeners to the Church of Railgun Telegram. He teases a possible part two on “the future of privacy and the whole post-quantum thing.”