What is Fraud Proof?

A fraud proof is a technical mechanism that operates as a bond when employed in decentralized application (dApp) ecosystems that make use of Optimistic Rollups (ORs), which are sidechains that seek to decrease the fees and latency dApps might experience on a blockchain platform. A sequencer, which is responsible for processing ORs, must include a fraud proof along with their work to incentivize good performance. Sequencers are financially rewarded for processing rollups according to consensus rules, and financially punished by forfeiting their fraud proof when they break them.