# Fraud Proof

A fraud proof is a technological method that functions as a bond in a decentralized environment that uses Optimistic Rollups (ORs)

## What Is a Fraud Proof?

The term 'fraud' is defined as **wrong conduct committed with the goal of gaining an illegal advantage** by depriving the victim of a right. Tax fraud, credit card fraud, wire fraud, and many others are all examples. Fraudulent conduct can be perpetrated by a single person, a group of people, or a company as a whole.

In the world of

blockchain,

**the term fraud proofs represent a technical method that is critical to enabling on-chain scalability of blockchains **(for example, through sharding or larger blocks) while ensuring that on-chain data is available and correct. Fraud proofs use Optimistic Rollups (ORs) that serve two functions: reduce costs and lower latency levels for decentralized applications on a blockchain network.

To reward good performance, a sequencer required to process ORs must provide a fraud-proof with their work. **Sequencers are compensated financially for executing rollups per the consensus rules**, and they are penalized monetarily for breaking them by forfeiting their fraud proof.

State transition fraud proofs work well, but they rely on a crucial assumption that all of the

block data is available. It is

** impossible to establish that a block ****miner**** is incorrect if it merely publishes the block header without the correct contents**.

Furthermore,

**even if 99% of the data is accessible, the remaining 1% may be required to establish the validity of a block** as we require complete data availability. This is a rigorous need for block validation because data might be inaccessible for a variety of reasons, not only malevolent nodes. Making data unavailability difficult for a rogue

node is the proper solution.

**Scaling public blockchains requires the use of fraud proofs and erasure codes.** They allow light nodes to make their own decisions about which blocks to reject without having to rely on a plurality of trustworthy full-nodes.

Even if brief zero-knowledge proofs could be used to confirm the correctness,

**an intruder/****scammer**** getting away with publicizing inaccessible blocks and having them included in the chain is still a big problem**, because it prevents all other validators from fully computing the state or making blocks that communicate with the part of the state that is no longer available.

**Fraud proofs show that a state transition was made incorrectly**. The fundamental benefit of fraud proofs is that they aren't required for every state transition, but only when things go wrong. As a result, they** use less computing resources and are more suited to a scalability-constrained setting**. The interaction of these protocols is their biggest disadvantage: they establish a 'dialogue' between numerous participants. **A dialogue/interaction/communication necessitates the presence of the parties**, particularly the party alleging fraud and permits other parties to disrupt the conversation in various ways.