To achieve the ambitious goal of mass adoption, blockchain technology is continuously evolving and innovating solutions. Compared to monolithic blockchain architecture, modular blockchains significantly enhance scalability, flexibility, and security by breaking down the core functions of a blockchain, paving the way for widespread blockchain adoption.

As one of the leading modular blockchain solutions, Fuel is set to launch its mainnet in early Q4 this year. Public data shows that in September 2022, Fuel raised $80 million in a funding round led by Blockchain Capital and Stratos, with participation from CoinFund, Maven11, Bain Capital Crypto, Spartan Group, and Alameda Research.

This article will provide an in-depth analysis of Fuel’s development history, technical features, team background, and ecosystem development while reviewing some key ecosystem projects for users.

Fuel development history

According to the Fuel team, Ethereum’s strong and thriving ecosystem holds great potential to become the decentralized world computer. However, the issue of state growth has not been properly addressed in recent years. While Ethereum’s modular blockchain and L2 solutions provide some scalability advantages, they also introduce challenges in fragmentation and interoperability and fail to meet the evolving rollup-centric needs of Ethereum.

In response, Fuel created a new architecture specifically designed for Ethereum Rollup needs: the Rollup OS. This system combines the strongest features of previous blockchains, including Bitcoin’s UTXO model, Solana’s parallelism, Ethereum’s security, Move’s asset-oriented design, and Cosmos’ interoperability and customizable VM, aiming to achieve high performance and minimal state growth. It provides developers with customizability and security while offering users a seamless experience.

Fuel was founded in 2019, and over the past five years, the team has completed significant iterations from V1 to V2. Although Fuel V1 was the first Optimistic Rollup solution on Ethereum’s mainnet, it was a simple proposal designed to address Ethereum’s scalability issue using an execution model different from the Ethereum Virtual Machine (EVM). However, due to limited use cases and the lack of smart contract support, Fuel V1 did not gain widespread user adoption. As a result, shortly after its launch, the Fuel development team shifted their full focus to developing V2, positioning it as a modular execution layer.

Fuel team and funding

The Fuel team is an international and distributed organization consisting of co-founder and CEO Nick Dodson, co-founder John Adler, and Chief Growth Officer Arjun Kalsy. John Adler is also a co-founder of Celestia, while Dodson is an early participant in the Ethereum ecosystem. Arjun Kalsy previously worked at Polygon and Mantle, focusing on ecosystem growth and successfully introducing over 50,000 decentralized applications, helping multiple projects transition from 0 to 1 in ecosystem development.

In terms of funding, in addition to the previously mentioned $80 million investment, Fuel completed a $1.5 million seed funding round in 2021, led by CoinFund, with participation from Fenbushi Capital, Origin Capital, and Blockwall.

Fuel core

Fuel is a fully functional blockchain operating system specifically designed for Ethereum Rollups, consisting of the following main components:

1) Virtual Machine (Fuel VM)

Fuel VM is the core of Fuel, with all its essential features (such as parallelism, state minimization, and customizability) derived from the VM. As an improvement over Ethereum’s VM (EVM), Fuel utilizes a strict state access list as a UTXO model to execute transactions in parallel. This approach simplifies state access and reduces contention in parallel processing, providing robust processing capabilities. Using Fuel VM, Fuel nodes can identify the accounts involved in transactions and map out dependencies before execution. This allows Fuel to leverage more CPU threads and cores typically idle in single-threaded blockchains. Consequently, Fuel can deliver greater computation, state access, and transaction throughput than single-threaded products.

2) Programming Language (Sway)

Sway, developed by the Fuel team, is a programming language designed for building smart contracts. It combines the best features of Solidity and Rust, enabling developers to easily deliver high-performance code that meets the demands of high-computation environments. On the one hand, Sway adopts Solidity’s smart contract paradigm language concepts, featuring built-in top-level contract storage and blockchain mechanisms that facilitate ergonomic and secure contract programming. Unlike Solidity, Sway offers a more advanced type system with features like traits, enums, and generics. On the other hand, Sway prioritizes compile-time analysis and safety through static analysis capabilities, similar to Rust’s borrow checker and safety-first semantics, and it also incorporates Rust’s syntax.

3) Integrated Toolchain (Forc)

The Forc toolchain allows developers to build and deploy DApps on the Fuel chain easily. By providing a comprehensive set of clear documentation and development tools, such as SDKs and APIs, developers can enjoy a fully vertically integrated experience. This includes scaffolding for new projects, formatting, running scripts, deploying contracts, and testing contracts.

With this complete operating system, the Fuel team aims to provide a seamless and developer-friendly experience for developers from both Web2 and Web3. They also hope to push the modularity boundaries through Rollup OS, bringing the best features of other Layer 1 solutions back to the Ethereum ecosystem.

Fuel development roadmap

Fuel’s robust development capabilities are vital to the continuous growth of its ecosystem. Fuel officially launched its final testnet on Sepolia at the end of May this year. According to official disclosures, it attracted nearly 2 million users in just three months, created 1 million contracts, and processed over 25 million transactions.

To ensure the security of user funds, Fuel partnered with Immunefi to launch a $1.3 million crowdsourced security audit program in June and July of this year, aimed at identifying potential vulnerabilities in the Fuel codebase before the mainnet launch. By early June, Fuel had conducted five internal security audits and received independent assessments from top auditing firms, including Trail of Bits, Ottersec, ChainSecurity, and Hexens.

The team is steadily advancing its mainnet launch plan and plans to secure more media exposure for the project in the coming months. Additionally, Fuel has introduced a rewards program that spans all stages of the Fuel network deployment, from the public testnet to the mainnet, to reward every user who contributes to the development of the Fuel network and ecosystem.

Fuel Ecosystem Project Review

Fuel has officially launched a quarterly funding program to attract more developers that offers comprehensive support—including funding, technology, marketing, and legal assistance—to outstanding projects. Currently, the number of projects in the Fuel ecosystem has surpassed 40, covering sectors such as NFTs, DeFi, oracle services, stablecoin protocols, wallets, cross-chain bridges, and derivatives.

Source: @bakosafe

Here is a brief introduction to some of the projects:

Spark

Spark is a full-chain order book trading platform built on the Fuel network, offering both spot and futures trading. Established in 2023, Spark completed a $1.5 million pre-seed funding round in May this year, with participation from P2 Ventures, Fuel, Unicorn Ventures, Curiosity Capital, and Ajit Tripathi.

Spark features the following key characteristics:

1. Fast Execution: Achieves rapid trading with quick settlement and minimal fees.

2. Self-Custody and Fund Security: Users can self-custody their funds during trading.

3. Optimal Pricing: Leverages ample liquidity from Fuel to achieve optimal pricing.

4. Community Governance: A DAO treasury will soon launch, allowing Spark trading users to govern the platform and drive community initiatives collectively.

Spark aims to provide a platform that accelerates the development of DeFi on Ethereum, introduces a wider range of products to the sector, offers algorithmic traders a comprehensive set of automated strategy tools, and creates an efficient platform for market makers and liquidity providers. To achieve these goals, the team has launched a market maker incentive program, where market makers can earn points rewards based on monthly trading volume, and specific service level agreements (SLAs) have been established to ensure liquidity and efficient trading.

Fuelet

Fuelet is a self-custodial wallet in the Fuel ecosystem. It focuses on user experience while enhancing security through Fuel account abstraction. Founded in 2022, Fuelet is the only Fuel wallet supporting both mobile and web platforms. It allows users to store, send, and exchange assets, browse decentralized applications (DApps), and pay gas fees with any token.

Users can create a new wallet in seconds using Fuelet’s Cloud Backup feature, eliminating the need to save recovery phrases manually. Additionally, users can utilize the Hardware Signer feature to turn their iPhones into hardware wallets, further enhancing security.

Thunder

Thunder is the first on-chain NFT marketplace on the Fuel network. It supports bulk listings and purchases to simplify the management and trading of NFTs. Founded in 2022, Thunder won the Fuel bounty award at the ETHBerlin hackathon and released its public beta version in June of last year.

Swaylend

Swaylend is the first lending protocol on the Fuel network, allowing users to earn passive income by providing liquidity to the market. It utilizes the Sway language but retains some of the core logic from its roots as a fork of Compound V3.

The Swaylend platform is built around a base asset market, enabling users to supply base assets and earn or borrow base assets while paying interest on a single asset. For instance, in the USDC market, USDC serves as the base asset that users can borrow or supply. On September 17, Swaylend completed a contract audit supported by Halborn.

PlayEstates

PlayEstates brings real estate onto the blockchain as the first RWA (Real World Asset) project supported by the Fuel network. The team’s mission is to revolutionize real estate investment by introducing Tokenization as a Service (TaaS), allowing global investors to easily own and invest in high-value U.S. real estate, intellectual property, investment funds, and more. All transactions on PlayEstates are insured, verified, certified, and compliant with the SEC, CFTC, and FinCEN regulations.

PlayEstates is incubated by Web3Labs in collaboration with NEO, ThreeDAO, Hashkey, and Water Drip Capital. According to the latest updates from the team, PlayEstates is focusing on product development and preparing for a crucial funding round.

Fluid Protocol

Fluid Protocol is an over-collateralized, decentralized lending platform built on the Fuel ecosystem. Its users demand stable digital currencies, and it supports partial liquidations.

USDF is a native over-collateralized stablecoin established on the Fuel network. Borrowers can obtain interest-free loans by depositing collateral, with the loans being issued in USDF and requiring a fixed minimum collateralization ratio of 135%. USDF is a soft-pegged digital asset equivalent to the U.S. dollar at a 1:1 ratio.

Fuel Name Service

Fuel Name Service is a decentralized domain name service on the Fuel network that allows users to create .fuel addresses.

Mira

Mira is an open-source, decentralized platform that seamlessly matches traders, liquidity providers (LPs), and protocols. Initially launched as an automated market maker (AMM), Mira plans to transition to a ve(3,3) model to maximize capital efficiency and user incentives.

According to the team’s roadmap, Mira has implemented basic AMM functionalities with volatile and stable swap features on the testnet. After the Fuel mainnet launch, it will also begin mainnet operations and initiate the Mira Dapps rewards program. By early 2025, Mira will have implemented ve(3,3) functionality and governance.

Currently, most projects within the Fuel ecosystem are in the early development stages, showing limited innovation in functionality and services, and the number of testnet users is relatively low. However, with the Fuel mainnet set to launch in the first quarter of this year, there is hope for a different landscape, and anticipation remains high.