DeFi
Arbitrum prepares for Stage 2 decentralization with permissionless transaction validation
The Arbitrum community gives the green light to the introduction of its BoLD dispute resolution protocol.
Big improvements are coming for Arbitrum, with TVL’s first Layer 2 network set to continue “Level 2 decentralization” and introduce zero-knowledge proofs.
The Arbitrum community is just hours away from passing the preliminary temperature check vote for a proposal to introduce permissionless transaction validation. Voting began seven days ago, with the proposal garnering near-unanimous support from ARB holders.
The upgrade would implement the BoLD dispute resolution protocol, paving the way for Arbitrum to achieve what Ethereum Chief Scientist Vitalik Buterin has called Phase 2 decentralization. This means that no centralized entity can unilaterally publish state roots for the layer 2 network, the task being exclusively carried out by Arbitrum’s code.
“BoLD is a new dispute resolution protocol that unlocks permissionless validation for Arbitrum chains and improves their security by mitigating the risk of delay attacks,” the proposal states. “BoLD accomplishes this feat by ensuring that any honest party can always successfully defend against malicious claims about the state of an arbitration chain.”
Withdrawals from Layer 2 rollups are executed through the network by posting a Layer 2 state root value to the Ethereum mainnet. The root value allows the Ethereum mainnet to verify that funds have been withdrawn from layer 2.
If a formal follow-up proposal to implement BoLD is adopted in the future, the upgrade would take effect on both Arbitrum One and Arbitrum Nova.
Layer 2 decentralization
At launch, most Layer 2 networks rely on centralized entities such as multisig wallets and security councils to display state roots as a security measure.
Buterin said Stage 1 rollups must have an operational proof-of-fraud or validity system that allows a project to accept or reject state roots in a decentralized manner. Security councils may have the power to ignore evidence of fraud or validity in order to protect a network from malicious actors.
Rollups with Tier 2 decentralization can still maintain a security council responsible for adjudicating state roots only in the event of code bugs or exploits. They must also include two or more independent implementations of validity or failure proof mechanisms.
June 11, Arbitrum announcement plans to introduce support for zero-knowledge proofs in the future via its upcoming Stylus MultiVM, paving the way for the introduction of multiple decentralized proof mechanisms.
According to L2beat, DeGate v1 and Fuel v1 are the only Layer 2 networks that have achieved Layer 2 decentralization. Arbitrator One, OP main networkZkSync Lite and dYdX v3 are classified as having Layer 1 decentralization. L2beat currently tracks 106 active and upcoming Layer 2 networks.
Arbitrum is currently the leading Layer 2 network with $18 billion in on-chain assets for a 40.7% market share, according to L2beat. Data from DeFiLlama shows Arbitrum-based DeFi protocols hosting $4.44 billion in TVL.
ARB price is down 3.4% in the last 24 hours, according to CoinGecko.