Fraud Proof

These proofs primarily act as a safeguard against incorrect state transitions. Since they are only activated when inconsistencies are identified, they conserve computational resources, making them ideal for environments where scalability is a priority. 

For example, Fraud proofs are crucial in Optimistic rollups to identify and handle invalid transactions. Whenever a transaction is approved, there's a specific dispute period where anyone can challenge the current state by presenting a valid fraud proof. If someone can prove a transaction is fraudulent during this window, it is nullified and the network readjusts to the previous state.

Fraud proofs are not without their cons. They require constant communication between multiple parties. This back-and-forth can lead to system disruptions and open the gates for dishonest behavior or other illicit actions.