Optimism Enhances Ethereum Layer-2 Security with Unpermissioned Fraud Proofs

• Optimism, an Ethereum-based ecosystem, recently implemented permissionless fraud proofs, allowing users to contest potentially fraudulent or incorrect transactions on Layer-2 networks.
• This mechanism stands in contrast to permissioned fraud proofs where only trusted proposers can challenge transactions, empowering all users to participate in the process.
• With this development, Optimism has moved a step closer to what Ethereum’s founder, Vitalik Buterin, labels as Stage 1 decentralization, adding a critical layer of security and trust to the network.

Optimism activates permissionless fraud proofs, enhancing decentralization and security on its Layer-2 network.

Implementation of Permissionless Fraud Proofs

Optimism’s new feature enables any user to challenge transactions they deem fraudulent or erroneous on its Layer-2 network. This crucial step towards full decentralization aligns with the vision outlined by Vitalik Buterin. Stage 1 decentralization, or the “limited training wheels” phase, denotes a functioning fraud proof system within the Layer-2 ecosystem. Despite this, if any discrepancy or misuse is detected, a multisig (multi-signature) system composed of trusted entities will intervene to invalidate the corrupt actions.

Reversion to Permissioned System Shortly After Launch

However, only two months post-activation of the permissionless fraud proofs on June 10, the Optimism Foundation reverted the network to a permissioned state. This decision followed “community-driven audits” that revealed several vulnerabilities at various levels. OP Labs’ engineer, Mofi Taiwo, presented a proposal on the Optimism governance forum detailing why the reversion mechanism was activated and the identified security weaknesses. Taiwo emphasized, “No security flaws were exploited, and user funds were never at risk. To avoid any potential instabilities, the permissionless reversion mechanism was activated until the identified vulnerabilities are resolved.”

Maintaining User Security Amidst Detected Vulnerabilities

According to Taiwo, two major issues were among the security weaknesses identified through the ImmuneFi bug bounty program. Despite the detection of significant problems, user assets remained secure throughout. “While auditors discovered some critical issues, user funds were never at risk. All listed audit issues could be detected by our monitoring tools,” Taiwo elaborated. Although the reversion mechanisms were audited, certain contracts related to the fraud proof system remained outside the scope of Optimism’s audit. Taiwo remarked, “…The challenge game and MIPS contracts fall under the liveness/reputation risk category which does not require audit. Reversion mechanisms simplify the error correction process without posing risks to user funds. Therefore, we decided not to conduct a remediation review for the changes proposed in this proposal.”

Future Updates and Security Measures

This update, referred to as “Granite,” is slated for implementation on September 10. Despite the hard fork not undergoing an audit, OP Labs conducted a security review of the changes, deeming them low-risk. “Granite” entails several network upgrades, enhancing system security and functionality. The Optimism team is committed to ongoing improvements, ensuring robust security measures and user protection in future releases.

Conclusion

Optimism’s journey towards establishing a decentralized, secure Layer-2 network continues with significant strides such as the implementation of permissionless fraud proofs. Despite encountering early-stage vulnerabilities, the network’s commitment to user security and system integrity remains unshaken. The upcoming “Granite” update is set to fortify these advancements, promising a more resilient and trustworthy network for its growing user base.