Why Does No One Use Arbitrum Fraud Proofs?

bolstering-the-arbitrum-ecosystem:-multimillion-dollar-grants-programs-underway Fraud Proofs

Since its mainnet launch in August 2021, Arbitrum has stood as a symbol of unyielding security. Remarkably, there hasn’t been a single submission of fraud proof, a testament to its robust architecture and the foresight of its developers at Offchain Labs.

Arbitrum’s Mechanism: What Sets it Apart

Diving deep into the infrastructure, Arbitrum, an Ethereum layer-2 solution, offers multi-round interactive fraud proofs. This system empowers a layer-1 verifier contract to assess the legitimacy of a challenger’s fraud-proof submission. Should the submission prove valid, the deceitful validator faces a stark penalty: their stake is forfeit.

The core idea behind fraud proofs revolves around validator challenges. When a validator deems a peer to have erroneously or, worse, fraudulently structured a block of transactions, they step in. Despite the mainnet’s maturation, we’ve yet to witness a genuine fraud-proof submission or a successful challenge.

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Ed Felten, co-founder and chief scientist of Offchain Labs, elaborated, “While our mainnet remains untouched, we did encounter one or two incidents on Ethereum’s proof-of-work (PoW). Following ‘The Merge‘, an Arbitrum version on the Ethereum PoW fork did face an attempt at data theft. Fortunately, a timely challenge quashed this effort.”

The Disincentive Strategy: Malice Comes at a Cost 

Why the lack of fraud attempts? The answer lies in Arbitrum’s well-constructed disincentive. Malicious validators, upon being caught, stand to lose their entire stake. Felten sheds light on this, noting, “The stakes are high. Should even one person challenge and debunk your claim, your entire stake vanishes. This has fostered a strong deterrence against malevolent actions.”

Currently, a select group of around 12 validators, as Felten revealed, engages in this fraud-proof protocol. This tight-knit, permissioned assembly ensures optimal security and monitoring.

As Arbitrum continues to evolve, it’s set to unveil its “BOLD” protocol—Bounded Liquidity Delay. According to Felten, this promising iteration endows Arbitrum with a swifter response mechanism for challenges. “In the existing model, a determined adversary could inflict weeks of delay by forfeiting multiple stakes. With BOLD, however, even the sacrifice of numerous stakes will only lead to an approximate eight-day delay,” he clarified.

Visioning the future, Felten anticipates a democratized approach. Arbitrum’s fraud-proof system will soon transcend its current confines, welcoming anyone to ensure the chain’s authenticity whenever challenges arise.

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