Arbitrum's Impressive Record on Fraud Proofs, Will ARB Price Surge?

Pathik Bhattacharya
Pathik Bhattacharya Published on September 11, 2023 01:59 PM

Arbitrum uses interactive, multi-round fraud proofs in which layer-1 verifier contracts evaluate the legitimacy of a challenger's fraud-proof submission.

Arbitrum's Impressive Record on Fraud Proofs
Source: Unsplash

Arbitrum, an Ethereum layer-2 solution, has made a remarkable statement in the realm of blockchain security.

Since its mainnet launch in August 2021, not a single fraud proof has been submitted on Arbitrum, according to Ed Felten, co-founder, and chief scientist of Offchain Labs, the company behind Arbitrum.

Arbitrum's Fraud-Proof Mechanism

Arbitrum employs interactive, multi-round fraud proofs, where layer-1 verifier contracts assess the validity of a challenger's fraud-proof submission. If proven valid, the fraudulent validator faces a stake slash as a penalty. These fraud proofs come into play when a validator challenges another validator's improper assembly of incoming transactions into the next block.

Despite being a robust security feature, Arbitrum's mainnet has yet to witness any attempts at fraud proofs, let alone a successful challenge. Ed Felten highlighted the strong disincentive for malicious validators, as anyone disputing their claims could result in the loss of their entire stake.

Permissioned Validators and the BOLD Protocol

Currently, approximately 12 permissioned validators participate in the fraud-proof game on Arbitrum. To further enhance the security and speed of challenges, Arbitrum is introducing the "BOLD" protocol, which promises faster guarantees for challenges.

Unlike the current version, where an adversary willing to sacrifice multiple stakes can cause delays, the BOLD protocol aims to defeat such attempts within about eight days, regardless of the number of stakes sacrificed.

Additionally, Arbitrum plans to transition its fraud-proof feature to a permissionless system, allowing anyone to contribute to ensuring the chain's correctness during challenges.

PlutusDAO's Proposal for ARB Token Incentives

The Arbitrum ecosystem is buzzing with innovation, not only in security but also in governance. PlutusDAO, a governance aggregator on Arbitrum, has submitted a proposal that could set Arbitrum apart from its Layer 2 competitors.

The Token Locking Proposal

PlutusDAO suggests the implementation of a token-locking mechanism paired with incentives for ARB token stakers. The proposal involves minting 1.75% of the total ARB token supply. Currently, the DAO has the authority to mint up to 2% of the total supply each year.

Under this proposal, ARB community members are encouraged to lock their tokens in exchange for incentives. A staking contract would allow users to lock ARB tokens for up to 365 days, with the flexibility to adjust their lock times and claim ARB emissions proportional to their locked tokens.

Arbitrum Community Response and Price Impact

The proposal received mixed reactions from the Arbitrum (ARB) community, with some suggesting alternative locking formulas and others supporting the initiative. At the time of writing, the ARB token is priced at $0.8607, with a 4.18% decrease on the day. Over the past month, Arbitrum has witnessed nearly 25% losses for ARB token holders on Binance.

The fate of ARB's price recovery remains uncertain, but PlutusDAO's proposal signals the community's active engagement and the potential for new dynamics within the Arbitrum ecosystem.

As per CoinStats, Arbitrum's price is $0.78871, down -8.27% in the previous 24 hours, with a market size of $1 billion. It has a circulating supply volume of 10,000,000,000 ARB coins and a maximum supply volume of 10,000,000,000, with a 24-hour trading volume of $188M.

arb price chart

Source: CoinStats


Arbitrum's impressive track record in fraud-proof security and the innovative proposal by PlutusDAO showcase the dynamism within the Arbitrum ecosystem. While security measures are robust, governance and incentives also play a pivotal role in shaping the future of Layer 2 solutions.


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