Decentralizing Optimism: The Implementation of Fault Proofs and Its Impact on Ethereum Layer 2

Decentralizing Optimism: The Implementation of Fault Proofs and Its Impact on Ethereum Layer 2

Optimism, a Layer 2 scaling solution for Ethereum, has recently achieved a significant milestone in its journey towards decentralized governance and operation. By reaching "Stage 1" decentralization, Optimism has taken a crucial step towards becoming a truly decentralized platform. This achievement is marked by the implementation of fault proofs, a mechanism that enhances the security and reliability of the network by allowing participants to verify the integrity of transactions and smart contracts. You might have seen on June 11 Ethereum cofounder Vitalik Buterian welcomed their entry as they reached stage 1. In this article, we'll dive deep and grasp what does it mean, what are "Fault proofs" and everything you need to know.

Well, before diving deep it's very essential to understand what are "Fault proofs"! Fault proofs are cryptographic proofs that attest to the correctness of transactions and smart contract executions on the Optimism network. These proofs enable validators to verify that all operations within a block have been executed correctly and securely. The introduction of fault proofs significantly strengthens the network's security model by providing a way to detect and prevent malicious activities or errors in contract execution.

How Does It Work?

The process involves several key components

  • Transaction Execution: Transactions and smart contract calls are executed on the Optimism network, which operates alongside the Ethereum mainnet but processes transactions off-chain to achieve higher throughput and lower fees.

  • Proof Generation: After transactions are processed, Optimism generates a proof that encapsulates the state changes resulting from these transactions. This proof includes details such as transaction inputs, outputs, and the current state of the blockchain after processing.

  • Verification: Validators on the network use specialized software to verify the generated proof against the current state of the Ethereum mainnet. If the proof is valid, it means that all transactions were executed correctly according to the rules of the Ethereum Virtual Machine (EVM).
  • Inclusion in the Mainnet: Once verified, the state changes are submitted to the Ethereum mainnet, effectively updating the global state of the blockchain. This process ensures that the mainnet remains secure and consistent with the operations performed on Optimism.

Benefits of Fault Proofs

  • Enhanced Security: By enabling validators to independently verify the correctness of transactions, fault proofs reduce the risk of fraudulent activity or errors in contract execution.

  • Increased Trust: As the network becomes more decentralized, users and investors gain confidence in the platform's ability to operate securely and transparently.

  • Scalability: While enhancing security, fault proofs also support Optimism's goal of providing scalable solutions for Ethereum applications. By processing transactions off-chain and then submitting validated state changes to the mainnet, Optimism can handle thousands of transactions per second, significantly reducing congestion and fees on the Ethereum network.

Now lets come on our main topic, Optimism has implemented fault proofs into its smart contracts, according to its development team, OP Labs. According to the team, Optimism has now reached “Stage 1” of decentralization, referring to a list of milestones articulated by Ethereum co-founder Vitalik Buterin. At least four other OP Stack networks will implement the fault proofs “soon,” including Base, Metal, Mode, and Zora.

On Optimism, users can now initiate withdrawals of Ether and ERC-20 tokens without involvement from any trusted third parties. In addition, if the team’s sequencer attempts to process invalid withdrawals, they can be “challenged and removed” by any user who submits a fault-proof showing that the withdrawal is invalid.

Optimism introduced a new system, "Cannon," aimed at enhancing security and moving closer to full decentralization. This system shifts withdrawal validation from the Optimism team to users, with overrides possible only through a council vote. The goal is to reach "Stage 2" where the council can only override if bugs cause contradictions among multiple proof systems. Cannon was developed with contributions from various teams and approved through Optimism's governance structures. Future plans include employing multiple proof systems for better security. Despite challenges, Optimism and other layer-2 solutions are advancing towards decentralization, as highlighted by Optimism founder Karl Floersch. Layer-2 networks aim to reduce transaction fees by processing some data off-chain, The journey towards full decentralization, as discussed by Ethereum co-founder Vitalik Buterin, involves accepting initial centralization but expecting eventual full decentralization.