Optimism Disables Fraud Proofs After Critical Audit Findings

Optimism (OP) has disabled permissionless fraud proofs, with a protocol engineer proposing a cautionary hard fork as a preventive measure.

The proposal outlines the Granite network upgrade, responding to security vulnerabilities identified by third-party auditors. If the upgrade passes, it will deliver better security and performance to the OP Mainnet’s fault-proof system.

Optimism Network Addresses Vulnerability Concerns

Disabling permissionless fraud proofs and resorting to a permissioned one comes after audits revealed several bugs in the recently launched system. According to the report, the audit exposed two high-priority issues, leading the network to take extra precautions. Importantly, the Optimism team assured users that their assets remain secure.

“Had an exploit been detected, the Deputy Guardian role – which is held by the Optimism Foundation and revocable by the Security Council — would have been expected to blacklist any exploitable dispute games or activate the permissioned fallback,” Mofi Taiwo, a protocol engineer representing Optimism contributor OP Labs, explained.

The Optimism network committed to enhancing its core security mechanisms in a May upgrade proposal. It also pledged to gradually build trust in the system’s reliability over time. This commitment led to the decision to activate the permissioned fallback and restrict output proposals, ensuring tighter control over potential vulnerabilities.

Read more: Crypto Project Security: A Guide to Early Threat Detection

The latest audit categorized the vulnerabilities as threatening OP Mainnet’s reputation and aliveness. According to the project’s guidelines, these did not require formal audits, so they had escaped Optimism’s audit scope. Nevertheless, they were flagged because they relate to the network’s fraud-proof system contracts.

Following the discovery, the network proposes a hard fork dubbed Granite Network Upgrade. This hard fork will include smart contract upgrades to fix the vulnerabilities identified in the audit and a Layer-2 (L2) upgrade that will improve the fault-proof system’s stability and performance.

Implications of Granite Upgrade

OP Labs does not anticipate any downtime due to the Granite Network Upgrade. Nevertheless, if the hard fork proposal passes, node operators must upgrade their software before September 11, the due date.

With permissionless fraud proofs now disabled, all pending withdrawals are invalidated. All withdrawals initiated less than a week before the upgrade will only be finalized one week after. Proposals made within a week of the permissionless game being reactivated will also be invalidated. Therefore, users must re-prove their withdrawal requests. 

The development mirrors key security concerns that continue to plague the DeFi space. Optimism’s native token, OP, is down 0.3%, in line with broader market gloom. Nevertheless, the Total Value Locked (TVL) of the Layer-2 network is up by $5.88 million since news of the planned upgrade broke. 

Read more: Optimism vs. Arbitrum: Ethereum Layer-2s Compared

A rise in TVL indicates increased capital inflows to the DeFi protocol, suggesting renewed confidence and investor interest in the platform. Users may be responding positively to the news, depositing additional funds into the L2 network due to enhanced security measures and improvements the upgrade promises.