🧞Why fraud proofs matter: Cartesi experience

Why fraud proofs are the future

Aug 05, 2024

GM and happy Monday frens🖖

We hear all the time that Zero-Knowledge is the endgame and that there is no better solution for Web3 security.

One company that disagrees is Cartesi, an application-specific rollup that uses fraud proofing for security.

Scroll down to learn why they're doing it and what the future holds for this solution:
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🤿Deep-dive: why fraud proofs are the future

Cartesi is an application-specific rollups with a Linux runtime. It can be deployed as a layer 2 (on top of Ethereum), as a layer 3 (on top of Optimism, Arbitrum, zkEVM chains, etc.), or as sovereign rollup.

Cartesi uses Dave (it's not an acronym, it's just the name), a permissionless, interactive, fraud-proof system. Gabriel Coutinho, Blockchain Engineer @ Cartesi, gave an excellent overview of fraud proofing at L2con, here are the key takeaways. Watch full presentation here.

Why do we need fraud proofs?

Cartesi wants to scale Ethereum without sacrificing security or decentralization. It's a trilemma, but it's really about not sacrificing the others to achieve scalability.

We have two main techniques for roll-ups: ZK and fraud proofing. There's a common perception that ZK is the end game, but that's not necessarily true.

ZK is great, there are many applications that will use it, but it's not a silver bullet. Especially when you talk about cost and throughput, ZK has some disadvantages compared to fraud proofs. So fraud proofs still have a very important niche for rollups.

How do fraud proofs work?

For simplicity, let's say there are two players, the validators and the blockchain. These validators agree on a state transition function, similar to a CPU instruction, and an initial state. They apply the state transition repeatedly to reach the final result, which they then prove to the blockchain.

If both validators agree on the result, the blockchain accepts it. If they disagree, a dispute is initiated to identify the liar. This involves a binary search through the computation to pinpoint the first disagreement. The blockchain then executes a single state transition function to determine who is lying. This is the basic principle of how fraud proofs work.

Challenges in permissionless systems

We want three main goals: security, decentralization, and liveness. Let's break these criteria down. Liveness is simple - we want the roll-up to settle quickly. Optimistic roll-ups take a challenge period to settle, and we don't want it to take much longer than that.

Now let's zoom in on security and decentralization. Security means that one honest validator can defeat all the others, even a nation-state. We want a single honest validator to bring all adversaries to their knees.

The second goal is that anyone can become a validator, even if they're broke and use a toaster for a computer. If you can join the protocol and defeat everyone on your own, then this system truly inherits the security of Ethereum. As long as Ethereum is running and bug-free, truth will be enforced. This is critical.

Types of proofs

There are three major algorithm designs. It's hard to meet all three criteria at the same time, so each made a different trade-off.

Cartesi is application specific and took a different trade-off from Arbitrum and Optimism.

The three main designs are Cartesi's (permissionless referee determinants), Arbitrum Bold, and Optimism's fault-tolerant system. The good news is that these three are state of the art and great improvements over previous systems. There's still room for improvement, but we can find a good solution.

Future of fraud proofs

The overall point is that while these systems are much better than what we had before, there's still room for improvement.

Here's a quick summary:

Permissionless Referee Determinants (PRT): Cartesi's algorithm is application-specific, optimized for security and decentralization, but sacrifices liveness. It's cheap—you only need a laptop to potentially defeat a nation-state. Settlement can be delayed, but it improves on previous issues with logarithmic rather than linear delays.
Arbitrum Bold and Optimism's Fault-Proof System: These systems take a parallel high-level approach, which makes sense given their large share and significant financial backing. They optimize for liveness but sacrifice some security and decentralization.

Both approaches have their trade-offs and appear similar at a high level, but there are distinct differences.

Cartesi is researching new techniques to improve the liveness of theirs algorithm. They aim to achieve an ideal state where all criteria—security, decentralization, and liveness—are fully met.