Rails launches Stellar-based onchain vaults for institutional crypto derivatives with segregated custody and onchain verification.
Rails has launched onchain vaults on the Stellar network to support institutional crypto derivatives trading.
The move aims to offer segregated custody, onchain verification, and lower counterparty risk for intermediaries accessing perpetual markets.
Rails Introduces Onchain Vaults on Stellar
Rails announced the release of Institutional-Grade Vaults built on the Stellar network.
The system allows brokerages, fintech firms, and trading platforms to access crypto perpetuals through one backend.
The company plans to add options trading in the second quarter of 2026.
The design separates trade execution from custody. Rails operates a centralized matching engine, while client assets remain in smart contract vaults onchain.
According to CEO Satraj Bambra, “The critical difference is custody and verifiability.”
Rails records profit and loss data, fees, and liabilities onchain every 30 seconds. The system then commits these records as Merkle roots.
Institutions can then reconcile the data with their own internal systems.
Focus on Custody Separation and Risk Reduction
Rails designed the vault structure to reduce counterparty and operational risk. The system separates client collateral from market-making capital and the company’s operating funds.
This setup avoids pooled accounts used by many centralized exchanges.
Bambra said failures at past platforms showed the risks of omnibus custody models. “If they fail, you become an unsecured creditor in bankruptcy,” he said.
He added that this was the situation faced by FTX customers.
Under the new model, client funds stay in audited smart contracts. They do not appear on Rails’ balance sheet.
The company said this structure allows institutions to verify holdings without relying on internal ledgers.
Why Stellar Was Chosen for the Vault System
Stellar was selected for its ability to support fast and predictable settlement.
The network confirms transactions in about five seconds, which allows frequent updates of vault balances and liability records.
This supports Rails’ model of committing profit and loss data onchain at short intervals.
Transaction fees on Stellar remain consistently low. This makes it practical to record ongoing state changes without adding material operating costs.
For institutional derivatives platforms, predictable fees help maintain stable risk management and reconciliation processes.
Stellar also has a long track record working with regulated financial entities. Banks, remittance providers, and asset issuers have used the network for years.
This history supports the use of Stellar for custody-focused vaults that require transparency, auditability, and operational reliability.
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Institutional Demand in Crypto Derivatives Markets
Crypto derivatives continue to dominate digital asset trading activity. CoinGlass data for 2025 estimated total derivatives volume at about $85.7 trillion.
Average daily turnover reached roughly $264.5 billion.
Futures and options are widely used by institutional traders for price discovery and risk management.
Open interest has also increased as professional participation has grown.
CoinGlass warned that leverage and complex structures can raise systemic risk.
An October 2025 deleveraging event showed weaknesses in liquidation systems and auto-deleveraging mechanisms.
Rails said its vault approach seeks to address some of these structural concerns.
Source: https://www.livebitcoinnews.com/rails-taps-stellar-to-power-onchain-vaults-for-institutional-derivatives/
