How Do Fraud Proofs in Optimistic Rollups Work to Secure Funds?
Fraud proofs are a mechanism where a challenger can submit a proof to the Layer 1 chain demonstrating that an off-chain state transition was invalid. This happens during a designated 'challenge period' after a batch of transactions is posted.
If the fraud proof is successful, the invalid state is reverted, and the staker who submitted the incorrect state is penalized, usually by slashing their staked collateral. This economic incentive and penalty system ensures honest behavior.
Glossar
Challenge Period
Dispute Resolution ⎊ The Challenge Period in blockchain governance or dispute systems denotes a specific time window allocated for network participants to contest a proposed action, a finalized transaction, or a validator's behavior.
Optimistic Rollup
Architecture ⎊ Optimistic rollups represent a Layer-2 scaling solution for blockchains, primarily Ethereum, employing a distinct data availability and validity proof strategy.
Fraud Proofs
Concept ⎊ Fraud proof refers to a cryptographic mechanism that allows a network participant to prove that a specific block or transaction is invalid without re-executing the entire computation.
State Transition
Mechanism ⎊ State transition, within cryptocurrency, options, and derivatives, denotes the validated change of an account’s balance or contract status on a blockchain or within a clearing system, driven by a transaction or event.
Optimistic Rollups
Scalability ⎊ Optimistic Rollups represent a Layer 2 scaling solution for Ethereum, designed to enhance transaction throughput and reduce associated gas fees without compromising decentralization.
Secure
Framework ⎊ Within cryptocurrency, options trading, and financial derivatives, a secure framework prioritizes the integrity and resilience of underlying systems against adversarial attacks and operational failures.