Fraud Proof

A fraud proof is a piece of data that proves the invalidity of transactions on optimistic rollups and optimistic bridges, underpinning their integrity. In optimistic protocols, whether rollups or bridges, transactions executed by a responsible actor (sequencers in the case of optimistic rollups and relayers in optimistic bridges) are initially presumed valid and processed without immediate Layer 1 verification. This approach boosts transaction speed and reduces costs, but it also increases the risk of erroneous or fraudulent transactions, potentially compromising network security.

To address these risks, optimistic protocols incorporate a “challenge period” for each transaction. During this period, any network participant can act as a disputer to inspect transactions and flag any suspicious ones.

If a disputer identifies a suspicious transaction, they generate a fraud proof supporting their claim and submit it to Layer 1, which acts as the settlement layer. Layer 1 then re-executes the disputed transaction to verify its validity based on the fraud proof. If the fraud is confirmed, the invalid transaction is rejected, and the sequencer or relayer responsible is penalized by having their security bond slashed. This penalty system ensures the protocol’s integrity through financial incentives.