Vitalik Buterin pitches Railgun model as privacy and fraud pre-screening solution

Vitalik Buterin sent out a message in support of Railgun, an alternative confidentiality service for Ethereum. He suggested the mixer or its forks could mix confidentiality with preliminary screening for suspicious wallets. 

Ethereum’s founder Vitalik Buterin supported Railgun as the solution that combines confidentiality and anti-fraud screening. Buterin suggested that the mixer can pre-screen transactions, after the protocol intercepted funds that originated from the recent ZKLend hack on Starknet. 

This is a solid demonstration of Railgun's privacy pools mechanism ( https://t.co/DekkatsMR5 ) working in practice, allowing Railgun to avoid serving proceeds of crime without using any snooping / backdoors.

How it works:

* Anyone can deposit into Railgun.
* After you deposit,… https://t.co/SqclMS3SzO

— vitalik.eth (@VitalikButerin) February 13, 2025

The funds from the hack are still held in the flagged wallet on Ethereum, as they were bridged to the L1 network. However, there are now more limited options to mix and launder those funds. Railgun remains a filter, unlike the Tornado Cash mixer. Addresses linked to interactions with Tornado Cash may also be blacklisted by exchanges, leaving limited options for the hacker to cash out. 

Railgun developed its ecosystem for screening, claiming its technology was available for crypto payrolls and honest traders. It relies on Private Proof of Innocence, a process of screening for an hour or more as needed, only then allowing further transfers.

The protocol started in 2023, after a partnership with Chainway. The Railgun model has no central authority, and the smart contract cannot freeze the funds. However, it can deny further transactions, breaking the chain of hiding funds for bad actors. 

Buterin is a known supporter of Railgun, both as a user and a sender of funds in support of the protocol. Previously, Buterin has moved as much as 400 ETH through the mixer, both as a signal and to achieve confidentiality for further transfers.

Previously, Buterin has praised Railgun for the possibility of building private pools, which filter out bad actors. Buterin has also linked to the Railway private wallet, which integrates the mixer’s service. 

Railgun holds peak ETH value

The Railgun protocol holds 28,110 ETH, down from a recent peak of over 32,000 ETH. The protocol is highly active, posting a transaction every few seconds. It has achieved $2.62B in total volumes since its launch. The project remains well known, though its fees may be higher when sending out more significant transactions. 

The protocol has accrued 14.45K Ethereum-based users to date. RAIL tokens are held in 3,269 wallets, receiving $3.48M in distributed rewards based on holding and staking RAIL. 

One of the roles of Railgun is to be used for DeFi activities while retaining confidentiality. Traders and high-profile influencers may want to obscure their wallets and actions, to avoid swaying the market with public transactions. For now, whales rarely use the mixer, though mid-range transactions are happening often. 

Dark pools in DeFi also have a role of not signaling the transaction, thus avoiding the effect of MEV bots and sandwich attacks. Through Railgun, traders can execute at a better price with reduced slippage, while avoiding any front-running bots. It also protects token ownership, tracking transfers, or any other DeFi activity. 

Users of the Railgun wallet can receive an additional 0zk address, where any tokens are fully verified, but invisible to third-party observers. The project’s team reports recent growth in the usage of the veiled 0zk addresses, which do not expose token holdings to third-party observers. 

Railgun itself reported that 2024 was a peak year for its development, allowing the mixer to offer privacy specifically targeted to Ethereum-based DeFi. The team reported $14M held in 0zk addresses at the beginning of 2024, with over $90M at the end of the year. Volume from shielded addresses also grew on all chains. 

Detractors claim centralization threats

Railgun services are available for Ethereum and its ecosystem, including Arbitrum and Polygon. The mixer has a version on BNB Smart Chain. It saw peak volumes during market rallies, especially in May and December 2024, reflecting its usage as a tool for decentralized trading with an added layer of confidentiality. Railgun aims to move a few steps beyond Tornado Cash, creating an ecosystem of users to automate privacy in DeFi.

Railgun critics claim its screening operates off-chain, and contains the possibility of tracking user data. The Private Proof of Innocence is linked to a centralized server, which can connect wallet information with the user’s IP. The mixer insists that it does not collect data, even though it can do so in theory. 

Railgun usage increased since Tornado Cash was banned for US-based traders. In the past three years, Tornado Cash retained a small baseline of users, though exchanges tried to disclaim any funds with a history of originating with Tornado Cash. 

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