I think my previous posts in this thread outline a safe solution to the data availability problem. By protocol, a sequencer merkelizes every sidechain block and posts the root on bitcoin via a piggyback mechanism. If he is a good sequencer, he also broadcasts the full block data on a secondary platform, such as his website. Users use that data to create transactions that update their state. If the sequencer ever withholds data, any user can start a challenge that forces the sequencer, at risk of getting slashed, to reveal a portion of the latest blockchain data. Specifically, the sequencer must reveal the portion involving that user's latest state, and then, whatever that state indicates about the user's balance, the sequencer must pay it out to the user on L1, if the user agrees that it is the right state. If the user claims the state has the wrong amount, the user can issue another challenge in which they present their "real" latest state and challenge the sequencer to prove a valid state transition which reduced the user's balance with their approval. The sequencer cannot do this if the user is honest, so they get slashed; or, if the user is dishonest, the challenge ends with no bad consequences for the sequencer. To disincentivize users from constantly issuing troll challenges, users must pay the cost of putting all challenge data on chain. If the sequencer does not post valid data, the sequencer gets slashed, and the user exits possibly even richer than he was before. If the sequencer posts valid data, the user has now exited and the data withholding attack was repeled by forcing the sequencer to reveal it or get slashed. The user paid extra for this "unilateral exit," but it is common for unilateral exits to cost more than cooperative ones, so that is fine imo. If the sequencer is unreliable about revealing valid data, he will lose his customers with no gain, and if he is reliable, none of this happens in the first place, because no one has an incentive to issue a costly challenge if the sequencer is doing everything right. For more details, I have a writeup here:

Telegraph

A forthcoming problem with bitvm

Introduction In the past few months, several bitvm companies announced preparations for launching on mainnet, and I began to research their plans. ...