On the Security of Optimistic Blockchain Mechanisms *

Many new blockchain applications (e.g., layer-2 scaling solutions, proof-of-stake layer-1 blockchains, cross-chain bridges, and data availability layers, etc.) adopt an "optimistic" design, that is, the system proceeds as if all participants are well-behaving, presumably sustained by some "stake-and-slash" mechanisms. We formulate the logic of such optimistic systems within a simple game and characterize all equilibria. We point out that such protocols cannot be perfectly secure if all participants are rational.

Therefore, to ensure security, protocol designers have to impose a trust assumption regarding the presence of altruistic participants. We explore alternative design changes that may help alleviate the identified problems (e.g., introducing certain redistribution across participants or adopting succinct proof-based designs).