Challenge Period

The challenge period, or dispute window, is a crucial timeframe assigned to each transaction within optimistic rollups and optimistic bridges. This allows network participants, known as disputers, to examine these transactions for any signs of fraud or errors.

This period is an essential security measure in optimistic protocols, which operate on the principle of trust. In these systems, sequencers’ and relayers’ actions are assumed to be honest and their transactions valid unless proven otherwise. This assumption reduces the need for immediate, detailed verification at Layer 1, speeding up processing times and lowering costs.

However, this approach carries the risk of accepting incorrect or fraudulent transactions. The challenge period ensures that any mistakes or malicious activities can be identified and corrected before being permanently recorded on Layer 1, preserving the blockchain’s integrity and security.

Dispute Process

If a disputer suspects a transaction is fraudulent during this period, they can contest its validity by presenting a fraud proof. The content of fraud proofs varies across protocols, but for Pheasant Network, they must include the Merkle proof for the transaction, the block hash, and other relevant information.

Submitting this proof initiates a dispute resolution process on the settlement layer to determine the transaction’s legitimacy based on the presented evidence. If the transaction is found invalid, the responsible sequencer or relayer is penalized by having their security bond slashed, which reinforces the system’s integrity.