Shield transactions are executed publicly, using a public wallet.
Under the hood, the shield action sends ERC-20 tokens into the RAILGUN contract, where they are associated with a RAILGUN Wallet and a private balance. Once shielded, the owning RAILGUN Wallet can initiate private transfers and cross-contract calls to interact with external smart contracts.
NOTE: Do not shield rebase tokens into RAILGUN, as these are not supported. For a list of rebase tokens, see Rebase Token List (Coingecko).