Institutional crypto derivatives provider Rails on Tuesday announced the launch of ‘Institutional-Grade Vaults’ on the Stellar network, allowing brokers, fintechs and other intermediaries to connect to crypto perpetuals through a single backend. The company targets options trading in the second quarter of 2026.
Satraj Bambra, CEO of Rails, told Cointelegraph that the core idea was to separate matching from money. “The critical difference is preservation and verifiability,” he said.
Rails runs a centralized matching engine, while customer assets are stored in controlled smart contract vaults on Stellar. Every 30 seconds profit and loss (PnL), fees and liabilities are recorded onchain, as Merkle roots that institutions can independently tune to their own data.
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Reduction of counterparty risk
A core claim in the design is that vaults reduce counterparty and operational risk by shielding customer collateral from market-making capital and Rails’ own corporate funds.
Bambra interpreted this as a direct response to previous stock market implosions, where assets were held in an omnibus account and customers had to rely on their internal ledgers.
“If they fail, you become an unsecured creditor in a bankruptcy,” he said. “This is exactly what happened to FTX customers.”
He said the lesson here was clear: “Separate execution from custody,” and emphasized that user funds remain in onchain smart contracts rather than on Rails’ balance sheet.
According to Bambra, the company chose the Stellar network because of its fast settlements and ten years of working with banks, remittance providers and tokenized asset platforms.
“If you’re asking institutions to trust smart contracts that contain tens of millions of capital, that legacy matters,” he said.
According to the announcement shared with Cointelegraph, the company has processed more than $3.4 billion in trading volume to date. It is registered under the Cayman Islands Monetary Authority (CIMA), but Bambra told Cointelegraph that Rails had “begun its registration process” with the United States National Futures Association.
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Crypto derivatives reached an annual volume of $85.7 trillion
Derivatives have quickly become crypto’s premier platform for price discovery and risk transfer. CoinGlass’ 2025 Annual Report estimates derivatives trading volume last year at about $85.7 trillion, with average daily turnover of about $264.5 billion.
These figures marked record volumes and deeper open interest as institutional traders turned to futures and options as their primary tools for price discovery and risk management.
Total volume of crypto derivatives in 2025. Source: MintGlass
The same report warns that increased complexity and deeper leverage chains have “increased systemic tail risks,” with the October 2025 deleveraging exposing how fragile liquidation mechanisms, auto-deleveraging (ADL) mechanisms and highly concentrated locations can turn still-overcrowded positions into excessive losses in the market.
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