Are Ethereum Layer-2s The Next Fraud Paradise? This Co-Founder Asks Hard Questions

Bartek Kiepuszewski, the co-founder of L2Beat, a portal for tracking Ethereum layer-2 activities, is concerned about the security and consistency of existing off-chain scaling solutions, suggesting that without fraud-proofs, there is room for fraud and irregularities.

Focus On Optimism And Manta: What’s Going On?

Taking to X on December 20, Kiepuszewski observed that some layer-2 solutions, such as Manta and Optimism, rely on sequencers to post data to Ethereum. However, without fraud-proofs, there is no way to verify that the data published by the Sequencer on the Ethereum mainnet is accurate or complete. 

In the co-founder’s view, whenever a sequencer posts the batch of transactions on the main net, there is no layer-1 state or event change. Per Kiepuszewski ‘s assessment, this is a worrying challenge that should be addressed to ensure whatever is posted is valid. 

As an illustration, the co-founder cited recent transactions posted by Optimism and MantaNetwork, two popular layer-2 scaling solutions for Ethereum. Kiepuszewski analyzed that Optimism recently sent a full “data blob” containing all layer-2 transactions. 

On the other hand, it was noted that MantaNetwork reportedly posted the “root hash of a data blob” to CelestiaOrg. The problem, the co-founder went on to add, is that despite these operations, Ethereum couldn’t determine whether their hashes were valid or not.

The co-founder argues that this could be a recipe for trouble since the lack of transparency on Sequencer’s operations presents a major concern, especially for users tracking the mainnet but not operating their layer-2 nodes. 

Ethereum Layer-2s Command Billions Without Functional Fraud-Proof Systems

Technically, in the current state, Sequencers play a vital role in ensuring that transactions submitted by users of any layer-2 scaling platform like Optimism or Arbitrum are processed and confirmed to be valid before they are transmitted to the Ethereum mainnet. 

However, while Ethereum layer-2 scaling solutions currently manage over $15 billion, based on L2Beat data, without public fraud-proofs, what sequencers publish on the mainnet becomes unclear.

According to L2Beat data, Manta Network has turned off its fraud-proof while still being developed on Optimism. At the same time, Arbitrum ‘s fraud-proof system is still not permissionless since validators must be whitelisted. 

In all, in most leading layer-2 protocols managing millions in total value locked (TVL), there is no public system to monitor sequencers and whether they are submitting valid details to the mainnet.