Blockchains such as Ethereum are incredibly secure but require a lot of processing power to handle transactions, leading to scalability issues.
For this reason, Layer 2 scaling solutions (e.g., Arbitrum, Optimism, zkSynk) have been created.
Validating transactions on Layer 2s based on optimistic rollups is done using something called a fraud proof to challenge assertions (i.e., L2 blocks).
What Is a Fraud Proof?
A fraud proof, sometimes called a fault proof, is essentially evidence of invalidity provided by validators on the L1 chain about a transaction processed on an L2 chain.
Fraud proofs are bundles of transaction in L2 blockchains that “point” to and prove an inconsistency in the transaction data.
They hold the necessary data required to re-run an L2 transaction on L1.
“Fraud and data availability proofs are key to enabling on-chain scaling of blockchains (e.g., via sharding or bigger blocks) while maintaining a strong assurance that on-chain data is available and valid”
(Al-Bassam, M., Sonnino, A., & Buterin, V. , n.d.)
How does the Proof System work?
After being rolled up, transaction data is sent from the L2 to the L1, where it is handled “optimistically” (i.e., it is assumed to be correct).
There is a period during which the new state of the L2 can be challenged, and that is when fraud proofs are issued by validators. The invalid L2 transactions are re-executed on the L1 chain, benefiting from its superior security.
If the L2 chain’s state is found to be invalid it is rolled back and the invalid transactions are purged. The validator who pushed the invalid transactions into the L2 can also be fined for their dishonesty.
The Purpose Behind Fraud Proofs
Fraud proofs are an essential component in validating the state of L2 blockchains. They hold all the necessary data to prove the validity of L2’s transaction data without a doubt. This is done as long as there is at least one honest validator on the network.
They are central to the mechanism that keeps optimistic rollups safe and secure from manipulation.
Conclusion
While Layer 2 blockchains may sometimes seem like an unnecessary abstraction over an already complicated system, they provide an elegant solution to a major problem in the blockchain space — scalability.
Even if you’re just a user and don’t participate in supporting the systems that make it up, you can always benefit from knowing how your data and finances are handled.
Al-Bassam, M., Sonnino, A., & Buterin, V. (n.d.). Fraud proofs: Maximising light client security and scaling blockchains with dishonest majorities. University College London & Ethereum Research.
Retrieved from https://sonnino.com/papers/fraudproofs.pdf
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