Offchain Labs presents BOLD (Bounded Liquidity Delay), a dispute protocol enabling permissionless authentication for Arbitrum chains, ensuring chain longevity and minimal latency while deterring malicious actors from escalating costs for honest entities.

Currently, settlement of state to Ethereum occurs for Optimistic Rollup chains like Arbitrum One and Nova via fraud proofs. Authenticators submit claims regarding L2 validity to a smart contract, with a seven-day window for challenges. Upon confirmation, L2 validity is acknowledged on Ethereum. However, the challenge protocol invites entities forwarding fraud proofs to Ethereum to verify L2 implementation accuracy.

Authentication on Arbitrum One and Nova via fraud proofs is permissioned due to susceptibility to denial of service threats, where hostile authenticators may disrupt fund claims verification, causing delays in L2 to L1 withdrawals. Offchain Labs addresses this by introducing BOLD, which imposes a fixed seven-day delay upon verification, eliminating delay threats and enabling permissionless authentication of Arbitrum chains, moving closer to decentralization. A single authenticator adjudicates disputes on Ethereum.

BOLD, stemming from Arbitrum's dispute mechanism, offers an improved approach to resolving disputes linked to L2 state implementation, independent of specific stakeholders. Offchain Labs unveils BOLD execution, featuring a challenge manager responsible for posting L2 state opinions, engaging in challenges against multiple hostile entities, and providing the correct state. The modular execution can be seamlessly integrated into Arbitrum Orbit chains.

BOLD's auditing by Trail of Bits aligns with Arbitrum Nitro's code base license. Offchain Labs is developing additional tooling, including a challenge visualizer and API, to facilitate understanding of this complex mechanism.

Before BOLD production, suggestions for operating an Arbitrum Nitro devnet with active BOLD challenges are solicited. Formal proofs code for BOLD must be published, followed by the creation of a public testnet environment for community engagement in challenge games. Feedback will inform the preparation of an AIP.