Railgun, a privacy-oriented protocol, is set to release a significant upgrade that will expand the use of private decentralized finance (DeFi) to a much larger audience. This new system upgrade, called ‘RAILGUN Connect,’ will function as a ‘plug and play’ privacy layer, where users will be able to utilize existing DeFi services such as Uniswap and Aave without revealing their resources from their shielded, zero-knowledge balance, protecting the platform’s users.
How the RAILGUN Connect Solution Bridges Privacy with DeFi
RAILGUN Connect has one major feature that bridges privacy with DeFi User Interactions. The primary development addresses a key question: “How would a user who has a private address with an embedded ‘hidden balance’ manage to provide collateral and interact with the public smart contracts?”
The solution is called ‘Mechs’, which are non-fungible tokens (NFTs) that have an embedded Ethereum address (0x). Users keep their positions (for example, their collateral) in their Mech address and send their Mech NFT to their private Railgun (0zk) wallet. The Private Wallet is connected to the Mech’s 0x address through Gnosis Guild’s Zodiac Pilot integration. Through this process, the DeFi application sees the normal address associated with the Mech; however, as the user doesn’t have to disclose their ownership and activity, they will be able to perform complex functions, including borrowing, lending, and executing intent-based trades, without having to reveal their entire portfolio.
Why This Represents a Pivot in On-Chain Privacy
The strategy aims to retrofit existing DeFi’s structure by adding a private layer rather than building out completely private ecosystems. That said, Railgun’s emphasis is on enabling users to enjoy privacy “wherever their capital and/or decentralized applications happen to exist” (on Ethereum mainnet), rather than requiring users to bridge over a new “private” chain with limited (or fragmented) liquidity options. This will significantly lower the adoption barriers for privacy-enhanced DeFi projects.
If everything goes well, this initiative will allow users to use privacy-related features as a basic option and prevent all of the problems associated with being front-run, surveilled, and maintaining their financial anonymity/discretion, without compromising on the depth or security of the underlying protocols they use.
