Fraud proof

Fraud Proofs present evidence that a state transition was incorrect. They reflect an optimistic view of the world: the assumption is that blocks represent only correct states of L2 data, until proven otherwise. In reality, a committed block could well include an incorrect state transition.

Description Conceptual protocol

Since a block may include an incorrect state transition, the Fraud Proof protocol allows for a time frame — the Dispute Time Delay (DTD) — to dispute this incorrect state. This window is measured in blocks. If no Fraud Proof is submitted within the DTD, the L2 state transition is considered correct. If a Fraud Proof is submitted to the smart contract, and is found correct (i.e., was submitted within the DTD, and indeed proves an incorrect state transition), it results, at a minimum, in the smart contract reverting to the commitment of the last correct L2 state. Additional steps, such as penalties to the violating party, may be applied.

Validity Proofs

Present evidence that a state transition is correct. They reflect a more pessimistic view of the world. Blocks include values representing L2 state if, and only if, that state is correct.

Sources:

https://medium.com/starkware/validity-proofs-vs-fraud-proofs-4ef8b4d3d87a