Railgun's Shielded Pool: A Reality Check on On-Chain Privacy

Railgun is a privacy protocol that allows users to move tokens through shielded pools on public blockchains like Ethereum, Arbitrum, BNB Chain, and Polygon. This approach keeps balances and transfers private, unlike traditional privacy coins that have their own separate blockchains.

Instead of building a new blockchain, Railgun uses a smart contract-based system to create private notes for users. These notes can be spent without revealing which note was used or where it went.

The protocol's governance token is RAIL, with 60 million in circulation. However, the token is not the asset being protected, but rather a tool for voting on protocol parameters and treasury decisions.

A recent analysis found that Railgun's reported total value locked (TVL) of $99.8 million was largely comprised of staked RAIL, which accounted for 82.9% of the figure. The actual shielded value on Ethereum was only $11.1 million, or 11% of the TVL.

Railgun's popularity can be attributed to growing demand for on-chain privacy in 2026. However, the token itself has struggled to keep pace with this trend, falling 5.54% over the past seven sessions.