Arbitrum Launches Fraud Proofs In Testnet: Why Is ARB Down?

Arbitrum, the leading Ethereum layer-2 scaling solution in terms of total value locked (TVL), has introduced its fraud proofs on testnet. This development, known as Bounded Liquidity Delay (BOLD), marks a significant step towards decentralization for Arbitrum. Layer-2 solutions have gained popularity, controlling over $37 billion of assets according to L2Beat data. However, one major challenge faced by these platforms is the lack of developed fraud proofs. Unlike traditional chains where transactions are confirmed by miners or validators, layer-2 options process transactions off-chain, making it difficult to verify their validity before being confirmed on-chain. Fraud proofs, such as Arbitrum’s BOLD, aim to address this issue by ensuring transaction validity during off-chain processing. The implementation of BOLD in Arbitrum’s testnet allows for increased decentralization, with the community running nodes instead of relying on a centralized validation system. Despite this positive development, the ARB token has experienced a decline in price, currently down 50% from its highs in March 2024. However, if buyers manage to reverse the recent sell-off, the token could potentially recover and surge towards $1.5.