How Is the ‘Staked Collateral’ in an Optimistic Rollup Used?
Staked collateral is deposited by the sequencer or other parties responsible for submitting transaction batches to the Layer 1 chain. This collateral serves as a financial guarantee of their honest behavior.
If a party is proven to have submitted a fraudulent state transition via a successful fraud proof, their staked collateral is 'slashed' or taken away as a penalty. A portion of the slashed funds may be awarded to the party who successfully submitted the fraud proof.
Glossar
Optimistic Rollup
Architecture ⎊ Optimistic rollups represent a Layer-2 scaling solution for blockchains, primarily Ethereum, employing a distinct data availability and validity proof strategy.
Fraudulent State Transition
Mechanism ⎊ A fraudulent state transition within cryptocurrency, options, and derivatives markets represents a manipulation of the underlying protocol or system to illicitly alter asset ownership or contract terms, deviating from intended operational logic.
Staked Collateral
Mechanism ⎊ Staked collateral, within cryptocurrency and derivatives, represents assets locked as economic guarantee for obligations, frequently associated with decentralized finance (DeFi) protocols and options positions.