Rails: The Future of Crypto Perpetuals Trading
The crypto exchange landscape is crowded, offers a poor user experience and is ripe for disruption. Rails is the solution that traders have been waiting for. For too long, the industry has forced a trade-off: centralized exchanges (CEXs) offer speed and liquidity but sacrifice security, while decentralized exchanges (DEXs) prioritize transparency at the expense of performance.
Rails is a next-generation self-custodial perpetuals exchange that ends this compromise. By blending the strengths of both worlds through high-speed execution, deep liquidity, and uncompromising security, Rails is poised to redefine crypto trading. This month we are going to dive into what the Rails platform is, how it works and why we are excited for the platform’s imminent launch.
Crypto trading platforms have evolved dramatically since Bitcoin’s debut in 2009 and are divided into two camps: centralized exchanges (CEXs) and decentralized exchanges (DEXs). CEXs, like Binance and Coinbase, emerged as the early giants, offering user-friendly interfaces, high-speed trade execution, and deep liquidity pools that attracted millions of traders. Built on centralized infrastructure, these platforms custody user funds, enabling rapid order matching and a seamless experience with sub-second trades and robust order books. However, this convenience comes at a cost: security vulnerabilities and opacity. High-profile hacks started as early as the 2014 Mt. Gox collapse and have sadly continued with the largest hack to date (USD1.5bn) happening this year on Bybit. At the same time, the FTX collapse highlights the problem of fund mismanagement and the risks of entrusting assets to a third party. Regulatory uncertainty and scrutiny has further complicated the dominance of CEXs.
In response, DEXs like Uniswap and dYdX rose to prominence, fuelled by the ethos of decentralization and the rise of Ethereum smart contracts. By eliminating intermediaries, DEXs give users full control over their funds through self-custodial wallets, leveraging blockchain transparency to build trust. Yet, this freedom has its own trade-offs. Limited liquidity, slower transaction speeds due to onchain settlement and complex interfaces often deter mainstream adoption. Even advanced DEXs struggle to match the performance of CEXs during volatile markets, leaving traders caught between two imperfect worlds: speed and liquidity on the one side, and security and autonomy on the other. This tension has set the stage for a new breed of platforms to bridge the gap.
Enter Rails, a hybrid platform that offers DEX-style onchain custody for users, coupled with instant trade execution, with the speed and liquidity of centralized exchanges. Let’s start with the onchain custody part of the equation. To trade on a CEX, a user must deposit the assets that they wish to trade onto the exchange. As discussed above, exchange controlled wallets are honey pots for hackers and a single point of failure. Rails eliminates this risk on its platform by using an onchain custody solution, where users control their assets using a “smart contract wallet”.
A smart contract wallet is a digital wallet that operates using self-executing smart contracts instead of relying on a third party (like a bank or exchange) to manage your funds. Think of it as a secure digital vault that only you can access, but with programmable features that allow for useful automation. Unlike traditional crypto wallets (such as MetaMask or Ledger) that require users to manually approve every transaction, a smart contract wallet can automatically handle transactions based on predefined rules.
Rails’ EVM-compatible smart contract wallet is specifically designed for perpetual trading on Rails Pro. It improves security and usability through:
- Escrow Functionality: When users deposit funds onto Rails, assets go into a smart contract escrow, ensuring that no one—not even Rails—can move them without users’ authorization.
- Onchain Transparency: Balances and trade history are always visible on the blockchain, so there is no risk of hidden manipulation or FTX-style fraud.
- Instant Trading Access: Even though funds are secured in the wallet, users can execute trades instantly without waiting for blockchain confirmations, thanks to Rails’ hybrid execution model.
- Zero-Knowledge Proofs (ZKPs): Rails uses cryptographic proofs to verify transactions without exposing private data, adding an extra layer of security.
By using Rails’ smart contract wallet, users never lose custody of funds. Even if Rails were to shut down, assets would still be accessible on the blockchain, unlike traditional exchanges where withdrawals could be blocked. This model gives traders the security of decentralized exchanges. At the same time, Rails offers instant trade execution, with the speed and liquidity of centralized exchanges. Let’s now dive into this.
At the heart of Rails’ high-performance trading experience is its “Hybrid Order Execution Engine”, which combines centralized computing efficiency with decentralized security. Unlike DEXs that execute trades entirely onchain, leading to slow and expensive transactions due to network congestion, Rails uses a centralized matching engine to handle order processing. This approach allows Rails to achieve:
- Sub-Millisecond Execution: Centralized order matching executes orders within sub-millisecond timeframes. This means that orders are processed almost instantly, rivalling the speed of major CEXs. In the Rails paper trading test environment (Rails Play), trading is so fast that placing an order to execution feels instantaneous.
- Low-Latency Trading: Unlike DEXs, which require blockchain confirmations for every trade, Rails finalizes transactions in real-time.
- Seamless High-Frequency Trading: The Rails proprietary engine ensures blazing-fast settlement and real-time account balance updates. Professional traders can deploy complex strategies, including market making, scalping, and algorithmic trading, without experiencing order lag or slippage.
Liquidity is a key factor in ensuring that trades are executed efficiently without significant price impact. Many decentralized exchanges struggle with fragmented liquidity and thin order books, leading to high slippage and poor execution quality. Rails has addressed this issue by partnering with institutional-grade market makers and liquidity providers. From day one of the platform going live, some very large market makers (such as Flowdesk) will be providing liquidity making sure that traders always have access to deep order books. In addition, Rails has close relationships with several high-volume “whale traders” who can contribute billions in monthly trading activity, strengthening market depth.
On the technical side, one of the most overlooked challenges in crypto trading platforms is scalability; how well an exchange can handle increased trading volume without bottlenecks or performance slowdowns. Many exchanges suffer from congestion issues, where high trading activity in one market (such as bitcoin perpetuals) slows down the execution of orders in other markets. Rails solves this problem with a modular scalability approach, allowing each trading pair to scale independently without affecting the performance of other markets.
Rails achieves this by structuring its matching engine into modular microservices, where each asset pair operates on its own dedicated stack. This means that if bitcoin perpetual contracts experience a surge in trading volume, additional computing resources are automatically allocated to that specific market ensuring that order execution remains fast and seamless. At the same time, trading in other markets like Ethereum or Solana remains completely unaffected, preventing the kind of network congestion that can cause delays or high fees on traditional exchanges. Position calculations are also sharded per user for speed. Rails is squeezing every last drop of efficiency to maximize speed and the trading experience.
One of the reasons we are so excited about Rails is that the team behind it is uniquely qualified to be building this next generation trading platform. CEO Satraj Bambra previously co-founded BlockEQ, a crypto wallet acquired by Coinsquare, giving him firsthand experience in scaling secure digital asset platforms. CTO Megha Bambra was the VP of Engineering at Grindr, where she led the company’s technical development through its IPO, and was also the CTO of StellarX, a decentralized exchange. COO Rick Marini brings decades of operational and investment expertise, having played a key role in taking Grindr public, and General Counsel & CFO Brent Vegliacich is a former EY and Reed Smith attorney, specialized in crypto regulations, ensuring that Rails is built on a strong legal foundation. The team’s experience spans software engineering, institutional trading, liquidity provision, and regulatory compliance, giving them a rare blend of technical and strategic expertise that few projects in the space can match.
In addition to this stellar team, the platform is launching in the U.S. at the perfect time. With a shifting regulatory landscape under the Trump administration, the U.S. is becoming increasingly pro-crypto, creating a favourable environment for exchanges that prioritize compliance while delivering cutting-edge trading solutions. Rails Pro is proudly regulated by the CIMA authorities. It implements robust compliance measures, including Know Your Customer (KYC) and Know Your Business (KYB) workflows, ensuring that the platform meets all regulatory requirements and remains accessible only in permitted jurisdictions.
When it comes to the current regulatory regime changes in the U.S., there is a risk of confusing deregulation with no regulation. Rails is opting for a strong focus on regulatory practices including starting the licensing process with the CFTC, allowing Rails to enter the U.S. market from day one. By doing so, the team is taking advantage of the evolving U.S. framework, giving traders confidence in the platform’s long-term stability. It is no secret that major financial institutions like Citadel are exploring deeper crypto integration. The demand for a high-speed, self-custodial, and regulatory-friendly exchange is stronger than ever. Rails is perfectly positioned to capture the opportunity that FTX squandered in 2022.
At CMCC Global, we are hugely excited about the imminent launch of Rails Pro. The platform embodies the future of crypto trading through its combination of the speed and liquidity of centralized exchanges with the security and transparency of onchain custody. With its hybrid execution engine, institutional-grade liquidity, and regulatory-first approach, Rails is uniquely positioned to lead the next wave of perpetual trading. The team’s deep expertise in crypto infrastructure, high-frequency trading, and compliance gives us confidence in their ability to execute at the highest level. We have made investments in Rails through both our Titan Fund and our Digital Asset Funds. Rails has the potential to reshape the landscape of digital asset trading, and we are excited to support its journey to becoming a dominant force in the industry.
