Ink, the Ethereum L2 incubated by Kraken, works with Optimism to push the bar forward on permissionless fault proofs

Ink, the Ethereum scaling layer incubated by crypto exchange Kraken, is implementing permissionless fault proofs on Thursday, network creator Andrew Koller told The Block in an interview. 

The move marks the latest technical advancement for Ink, which has charted a period of rapid development since launching months ahead of schedule in December.

Notably, Ink is the first Superchain network to implement multiple “challengers"  since Optimism tested that ability on the OP Mainnet late last year. At launch, smart contract automation protocol Gelato and Kraken will both run Ink challengers, the onchain tool that allows anyone to dispute the validity of a transaction.

To some extent, Ink represents a new mentality at Kraken, one of the oldest extant exchanges founded in 2011. Last year, after hiring board member Arjun Sethi as co-CEO, the company decided to trim staff , reduce bureaucratic overhead and operate more like a startup. 

Last week, for instance, Ink became the testing ground for Tether’s new multi-chain tokenized dollar , USDT0. 

“Hopefully us moving fast like this and working with Optimism and broader protocol community sets that standard,” Koller said.

What are fault proofs?

Fault proofs, introduced to the OP Stack in June 2024, are especially important to Optimistic rollups, a type of blockchain scaling solution that assumes transactions are valid unless proven otherwise. 

Users can submit proofs that challenge the state (essentially, a record of who owns what on a blockchain) of an L2 like Ink and are rewarded with a portion of the disputed funds if they correctly identify a potentially fraudulent or otherwise erroneous transaction. 

Koller said Kraken has seeded its challenger with about 49 ETH (about $156,000) at launch. “We want to make sure that there's enough ETH in there to handle any kind of state changes,” he said. In its documentation , Optimism suggests challengers are seeded with approximately 14 ETH. 

“We'll flip the switch and then anybody in the world, if they have ETH and they want to stake it into this challenger, they can then run their own and push this into the decentralized world that blockchain should be,” Koller said.

Code is law?

Having a host of challengers is particularly important for maintaining “credible neutrality,” a core ethos of Ethereum where users can trust no one party can or will be favored. Today, the majority of Superchain networks maintain centralized challengers, meaning they have unilateral control over changing the state of the chain. 

This is significant given that fault proofs can roll back any type of transaction on an L2, and are not necessarily limited to fraud. There’s an ongoing debate within developer circles about the correct terminology between “fault proofs” and “fraud proofs,” Koller said, given that “literally anything could be challenged.”

“If there's consensus that comes to it and they want to do it that's the whole purpose of this technology,” Koller said, noting that this, like the DAO Hack in 2016, complexifies the notion that “code is law.” “We won't be able to control it and can’t revert a state change.”

Koller said that Ink could be criticized as a “corporate chain” that still runs a centralized sequencer as all Optimistic rollups do for the time being; he argues they’re taking tangible steps towards decentralization. The “crypto ethos” doesn’t begin and end with the idea that blockchains are immutable — it’s about empowering users of tech to prevent tech from using them.

“I would love it if everybody in the crypto world held this ‘decentralized fire’ to everybody's asses and made sure that we were all — in a nice way — sitting in the same room with guns pointed at each other under the table,” he said.

Rolling out on a rollup

Fault proofs weren’t always possible on OP chains, but today, they have become the norm. Unichain, the L2 created by Uniswap, made it a priority to implement them at mainnet launch. Coinbase’s Base network, which launched in 2023 before Optimism introduced fault proofs, rolled them out last October.

In total, approximately 10 people at any given time were working to launch permissionless fault proofs on Ink, including two to three Kraken engineers, three to four from Gelato and Optimism’s “whole fault proof team,” Koller said. 

Koller said that the speed at which Ink launched prevented them from including fraud proofs at the jump. He noted they were in discussions with Optimism in December to see if “we could work together really fast” to have the system ready, but ultimately “made a pretty strong decision to say we need a little bit more time to make sure everything's going to be super secure.”

“We like to move fast. We like to be secure with it though,” Koller said.