Offchain Labs Implements Bounded Liquidity Delay (BoLD)

Offchain Labs, the firm building the Arbitrum project, has implemented the Bounded Liquidity Delay (BoLD) — a dispute protocol that allows for “permissionless validation” in its Layer 2 ecosystem chains, enhancing network decentralization and security.

Following a governance vote approval, BoLD is now active on Arbitrum chains, One and Nova. This system replaces the previously allow-listed validators with a permissionless mechanism, opening participation to anyone interested in network security.

Offchain Labs notes that validation on optimistic rollups has remained complex over the years. Despite fraud proofs in place, chains could be vulnerable to denial-of-service attacks. A malicious validator could delay withdrawals and state confirmations.

This complexity previously required permissioned validation, limiting security and decentralization. The launch of the BoLD protocol allows anyone to make state assertions on the chain, creating an open system.

> “For the first time, a single honest validator can protect the network against any number of adversaries during denial-of-service attacks. State confirmations happen within a guaranteed timeframe, no matter what attackers try,” Offchain Labs stated.

How Does It Work?

Arbitrum operates as an optimistic rollup, a Layer-2 scaling solution aimed at enhancing Ethereum’s scalability. These rollups process transactions off-chain and only submit transaction summaries to the Ethereum mainnet, reducing congestion and costs while maintaining security.

Optimistic rollups assume transactions are valid unless challenged, differing from zero-knowledge rollups that require cryptographic proofs for each transaction. This mechanism allows for faster processing but relies on a system for contesting fraudulent transactions.

BoLD modernizes the fraud-proof system in optimistic rollups by introducing an interactive, time-bound dispute resolution mechanism, ensuring disputes are resolved within about 12 days for both Arbitrum ecosystem chains.

A key feature of BoLD is that it enables anyone to validate transactions and challenge assertions, moving away from a permission-based validator system, thus promoting a more decentralized and open validation process.

Currently, optimistic rollups employ a 7-day challenge period for fraud proofs, a timeframe deemed reasonable for the Ethereum community to address potential attacks and maintain security. However, theoretically, fraud proofs may take an indefinite amount of time for resolution since malicious actors can extend this by continuously opening disputes and forfeiting bonds.