Rails Segregates Custody On-Chain After Processing $3.4B
Institutional crypto derivatives provider Rails has launched its “Institutional-Grade Vaults” on the Stellar network, creating a new infrastructure for brokerages and fintechs to access crypto perpetuals. The company, which has already processed over $3.4 billion in trading volume, uses a hybrid model that combines a centralized matching engine for speed with segregated on-chain custody for security. Client assets are held in audited smart contract vaults on Stellar, with profits, losses, and fees committed on-chain as Merkle roots every 30 seconds for independent verification.
This structure is a direct response to previous exchange failures where commingled funds left clients as unsecured creditors. By ring-fencing client collateral from both market-making capital and Rails’ own operating funds, the model seeks to eliminate the primary counterparty risk that led to catastrophic losses for customers of platforms like FTX. User funds remain in onchain smart contracts, not on Rails' balance sheet.
Separate execution from custody.
— Satraj Bambra, CEO of Rails.
Stellar Chosen to Tap $85.7T Derivatives Market
Rails selected the Stellar network for its fast settlement finality and established track record with financial institutions. According to CEO Satraj Bambra, Stellar’s “decade of work with banks, remittance providers and tokenized asset platforms” provides the heritage necessary for institutions to trust smart contracts holding millions in capital. The firm is registered with the Cayman Islands Monetary Authority (CIMA) and has started the registration process with the U.S. National Futures Association.
The launch positions Rails to compete for a share of the rapidly expanding crypto derivatives space, which reached an estimated $85.7 trillion in annual trading volume in 2025 with an average daily turnover of $264.5 billion. While futures and options have become the primary tools for institutional price discovery, recent market-wide deleveraging events have highlighted the systemic risks of fragile liquidation engines on centralized venues. Rails aims to provide a more robust solution, with plans to introduce options trading in the second quarter of 2026.
