Interviewer: Arjun Kalsy, Chief Growth Officer, Fuel Labs
Interview and article: Peng Sun, Pzai, Foresight News
"We expect all future blockchains to be modular in design," Arjun Kalsy, Chief Growth Officer of Fuel, told Foresight News when talking about how he views the competition between monolithic blockchains and modular blockchains. Speaking of the Fuel team, he emphasized: "We hope to push the boundaries of modularity through our Rollup OS, master the execution layer, and bring the best features of other Layer 1 ecosystems back to Ethereum."
The development of the crypto ecosystem is accompanied by an explosive growth in the number of users and interactions. In the existing monolithic Layer 1 architecture, the constraints of handling a large number of concurrent transactions are relatively prominent. Therefore, in the long history of the development of the EVM ecosystem, there are endless discussions about capacity expansion and efficiency improvement. When Vitalik proposed Rollups as a technical development route, the Fuel team became the first team to deploy Optimistic Rollup on the mainnet, but because of their unique execution layer based on UTXO, they had few users.
Later, as the modular narrative emerged, the team began to build their V2 version and positioned it as a modular execution layer. They combined the UTXO model and the Sway language that inherited Rust syntax and integrated the characteristics of the Solidity language to innovate their own Fuel VM, and then built a Rollup OS that maximizes throughput and minimizes latency. These constructions have made Fuel one of the emerging expansion teams in the Ethereum field.
The background of Fuel's team is very interesting. Its co-founder John Adler is also the co-founder of Celestia, and CEO Dodson is also a participant in the early Ethereum ecosystem. Before joining Fuel Labs, Arjun Kalsy also participated in ecological growth-related work at Polygon and Mantle, and built an ecosystem that includes more than 50,000 DApps. As an engineer, his passion has always been to build infrastructure that solves core problems in the blockchain field. As someone who has been wandering in the Ethereum ecosystem, he also hopes that Rollup OS can bring the best features of other Layer 1 back to the Ethereum ecosystem.
Foresight News: Please briefly introduce yourself and the team. Why did you choose to join Fuel and what was your experience in the crypto field before that?
Arjun Kalsy: Thank you for having me! Prior to joining Fuel Labs, I was the Head of Ecosystem at Mantle, and before that, the VP of Growth at Polygon. At Polygon, I spearheaded partnerships with industry giants like Reddit, Instagram, and Disney. I built the Mantle and Polygon ecosystems from scratch, bringing in over 50,000 decentralized applications.
While I enjoy the business side of things, I consider myself an engineer at heart, and my true passion lies in building and developing core blockchain infrastructure that solves critical problems in the blockchain space. Polygon and Mantle have created a unique niche for themselves, and I’m excited to rekindle my burning desire to solve problems from zero to one at the root.
That’s why I was attracted to Fuel Labs, the team behind the first Optimistic Rollup on Ethereum, and the first to achieve phase-two decentralization with Fuel V1. We continue to push boundaries with our Rollup OS, an operating system for Ethereum Rollups. Rollup OS is different from other operating systems in that it solves the scalability problem through a different paradigm: minimizing state growth, mastering the execution layer, and bringing the best features of other layer 1 ecosystems back to Ethereum. These key goals are the driving force behind our efforts to change the scalability landscape.
Foresight News: What got you involved in building Fuel, and what do you want Fuel Labs to become?
Arjun Kalsy: The motivation behind Fuel stems from two key observations of the Ethereum ecosystem. First, we saw Ethereum’s vision of a programmable, decentralized world computer as the foundation for solving human coordination problems. Fuel aims to further this goal by creating blockchain infrastructure that can be owned and operated by ordinary users, paving the way for the creation of a fair and equitable digital economy. We believe that by solving the problems of state growth and blockchain sustainability, Fuel can build a scalable, powerful economy on Ethereum’s decentralized trust layer.
Second, we recognize that the rise of modular blockchains and Layer 2 solutions, while offering significant scaling advantages, also creates challenges in terms of fragmentation, interoperability and cross-chain bridge risks, whereas existing The blockchain architecture was not designed with this modular future in mind.
These observations led us to create Rollup OS, an evolution of the Ethereum Virtual Machine (EVM). Our goal is to directly address these challenges and support Ethereum's vision of a scalable future centered around Rollups. Fuel combines the best features of existing blockchains, such as state-minimized execution, UTXOs, parallelization, asset-oriented design, interoperability, and security - with native account abstraction and support for all network wallets.
Ultimately, we envision Fuel as the power behind future blockchains that will be secured by Ethereum. Our goal is to create a flexible, efficient infrastructure that can adapt to the ever-changing needs of the blockchain ecosystem and facilitate true human collaboration in the digital age.
Foresight News: How is the Fuel team structured? How do teams work together?
Arjun Kalsy: The Fuel team is a remote-first, globally distributed organization with contributors all over the world. Similar to open source initiatives, our structure enables every contributor on the Fuel team to think freely, encouraging individual initiative to improve the organization. Over time, we have evolved a set of processes that enable teams to collaborate across time zones and contribute effectively to the development of the project. We value flexibility, adaptability, and innovation to stay ahead of the latest market insights. At the same time, we actively engage with the broader Ethereum ecosystem and immerse the Fuel community in the same matrix. This enables us to build original research and cutting-edge technical solutions that are aligned with our mission to advance the entire blockchain industry.
Foresight News: Fuel completed an $80 million round of financing in 2022. What was the defining moment of this financing? Is the next round of financing already (or is it being) planned?
Arjun Kalsy: Fuel's backers are long-term thinkers with a deep understanding of the blockchain space. They understand the challenges facing blockchain technology, and our goal is to solve these challenges, so investors are confident in the team's ability to deliver on this promise. The Fuel team has delivered the first phase 2 Optimistic Rollup and has proven its ability to build and deploy breakthrough technology.
State growth is a problem that remains unsolved even ten years after the birth of Ethereum. Solving the problem of high performance while minimizing state growth has long been a problem that has puzzled and challenged industry builders. Fuel successfully solves this problem, which is why the project is so highly regarded among industry builders and blockchain technology experts.
We have no plans to conduct any additional sales and will launch the mainnet in the fourth quarter of this year.
Foresight News: What have been the biggest obstacles/difficulties that Fuel has faced over the past few years?
Arjun Kalsy: Fuel Labs has made great progress in the field of Optimistic Rollup with a clear first-mover advantage. However, this path is not without challenges. After learning from the challenges faced by Ethereum and other L1 blockchains, the team proposed a completely different approach and built a virtual machine from scratch to achieve high performance and state minimization. The use of UTXOs allows for high-throughput parallelization of transactions and the flexibility to add new types of transactions. Stateless primitives such as predicates and scripts allow users to execute transactions without increasing the state of the blockchain. In addition, the team created Sway, a language that is well suited for high-performance VMs. The end result is an optimized ETH Rollup operating system. The team spent 3 years to perfect this architecture. In addition, when we first launched in 2021, the concepts of modular blockchains, execution layers, and state growth were still very unfamiliar. Considering that in the past two years, scalability solutions have only recently received the attention they deserve. So introducing the technical principles that underpin secure and scalable blockchain transactions to the market remains an ongoing challenge, and we are actively cultivating an optimal, developer-friendly environment to bridge the knowledge gap.
Foresight News: What changes has Fuel gone through from V1 to V2? Why switch to an operating system like "Rollup OS"? During the discussion, what interesting ideas and discussions took place within the team?
Arjun Kalsy: Since Fuel was founded, the technology has undergone significant progress between V1 and V2. While V1 achieved two-stage decentralization, a key milestone for Layer 2, Fuel Labs has taken Rollup OS a step further, and by leveraging UTXO, parallelization, and many other innovative technologies, Rollup OS is designed to maximize throughput and minimize latency. This enables Fuel to use more CPU threads and cores, which are typically idle in single-threaded blockchains. As a result, Fuel can provide more computation and state access than other blockchains. Rollup OS also introduces groundbreaking optimizations to deal with state growth, which is the next major performance bottleneck.
Tokens are fundamental building blocks of the industry, so we are focused on maintaining an asset-oriented design — meaning Fuel will have native support for Ethereum and other ecosystem assets. By doing so, we significantly reduce interoperability risk and user complexity.
Today, the Fuel stack is a combination of the virtual machine Fuel VM, the programming language Sway, and the integrated toolchain Forc, whereby we have created a complete operating system to run Rollups. We expect to deploy several Fuel chains covering a variety of use cases in the near future.
Foresight News: What are the advantages and features of Fuel as a modular execution layer? What breakthroughs will Fuel bring to the mass adoption of Ethereum?
Arjun Kalsy: That’s a great question. Our mainnet launch will undoubtedly demonstrate our scalability capabilities, but if we distill it down to three key points, it’s state persistence, high throughput, and great user experience and developer experience.
We aim to achieve this by focusing on three pillars: a relentless focus on innovation by pushing the boundaries of what is possible with FuelVM and Sway; fostering a sustainable, diverse, and engaged community with comprehensive resources that cater to all technical mastery levels; and exploring new possibilities for innovation in DApps. We have fully integrated on-chain order books, NFT platforms, and ultra-fast random generators, and look forward to building the Fuel native protocol at the forefront of crypto, including DeFi, NFTs, Gaming, DePIN, and more.
Foresight News: Why did you choose UTXO instead of the Ethereum account model? What are the problems with the current mainstream account model? Can the "stateless" UTXO model improve Fuel's capabilities? How difficult is it to integrate this UTXO model with the Ethereum ecosystem?
Arjun Kalsy: In an account-based model, every transaction modifies the entire account state, which has several limitations in the context of Rollups. First, state management is very complex. Tracking every change to an account state can be cumbersome and computationally expensive. This can lead to scalability bottlenecks, especially in high-throughput environments like Rollups. Second, concurrency issues severely hinder performance - especially compared to, say, parallelized blockchains - and the risk of conflicts and race conditions can lead to undesirable outcomes.
However, by adopting a UTXO-based model, we are able to truly simplify the development process. UTXOs simplify state access, reduce contention in parallel processing, and enhance the design space for developers to create new features and applications that leverage their unique properties. For example, UTXOs inherently provide better privacy, facilitating the development of privacy-centric solutions. Last but not least, Fuel’s UTXO design prevents the critical vulnerability of transaction malleability, which allows complex DeFi primitives like Uniswap to run smoothly on Fuel, which has never been possible before in the context of UTXO chains.
Foresight News: What are the characteristics of the Sway language developed by Fuel? It seems unfamiliar to most people. Is the learning curve relatively high? In addition, how will you build the Sway developer community and how to motivate more Web2 and Web3 developers to build projects on Fuel?
Arjun Kalsy: Sway is a powerful and user-friendly programming language designed for building smart contracts. Sway draws inspiration from various languages and provides a more intuitive combination of features, allowing builders to easily deliver high-performance code.
Here are some of Sway’s key features:
Modern design for robust applications: Sway has a comprehensive type system that is suitable for a wide range of blockchain applications. This built-in structure helps developers write clearer, more maintainable code with less potential for errors. Most importantly, learning Sway allows you to build everything across the entire blockchain stack.
Simplify development with tailor-made tools: State-of-the-art development tools work hand in hand with Sway. These tools simplify the development process, automate repetitive tasks, and reduce the need for boilerplate code, allowing developers to focus on the core logic of their smart contracts.
Security First: Sway prioritizes security by providing powerful static analysis capabilities. This helps enforce measures such as the Check-Effect-Interact (CEI) model. By proactively identifying vulnerabilities, Sway helps developers build safer smart contracts, reducing the risk of exploitation.
People who are familiar with Rust can definitely use Sway, as it integrates its syntax and robustness and aims to be easy to understand for developers familiar with other languages. Compared to Solidity, Sway provides a more advanced type system with features such as traits, enumerations, and generics. This makes the code more expressive and robust.
On the other hand, while Sway inherits Rust's focus on type safety and performance advantages, it simplifies the memory model by eliminating the need to manage lifecycles - a complex concept that can be challenging. Sway further enhances the developer experience by including blockchain-specific concepts that are designed to make working with smart contracts more intuitive. This combination of features makes Sway a powerful and user-friendly option for building secure and scalable blockchain applications.
Fuel understands the need to attract developers from both Web2 and Web3 backgrounds. So in Web3, Fuel is focused on building interoperability with existing Ethereum tools and infrastructure, which will be a major attraction for builders who are already familiar with the largest smart contract ecosystem. They can leverage their existing skills while exploring the potential of Fuel.
For Web2, we will create a conducive learning environment with clear documentation, tutorials, and ready-made support. This will make it easier for developers (regardless of their prior experience) to learn Sway and build on Fuel.
Foresight News: What are the current Fuel ecosystem projects? What projects do you think are the most suitable for Fuel? Which track areas will the Fuel team focus on supporting?
Arjun Kalsy: Current Fuel ecosystem projects include:
Fluid Protocol: Fuel’s native decentralized stablecoin that uses a fixed minimum CR (collateral ratio) of 135%. Fluid Protocol is also the first liquidity-inspired protocol to support partial liquidations.
Bako Safe: Bako Safe is a multi-signature wallet built specifically for the Fuel network. It provides a powerful and user-friendly solution for managing your crypto assets on Fuel with enhanced security features.
Kassiopea: A decentralized perpetual exchange built on the Fuel network, providing users with the ability to trade commodities, real-world assets (RWA), and cryptocurrencies.
Zap: Zap is an important infrastructure project in the Fuel ecosystem. It acts as a bridge that allows existing Web3 and DeFi applications built on Ethereum to seamlessly interact with Fuel's high-speed, low-fee Layer 2. These applications can unlock the scalability and cost-effectiveness of Fuel without making major changes to their code.
Foresight News: What is Fuel’s current market strategy and what regional markets are you focusing on? In the current bull market, the Asia-Pacific region has attracted a lot of attention from project owners and investors. Does your cooperation with OpenBuild mean that you are more optimistic about the Asia-Pacific market?
Arjun Kalsy: At Fuel Labs, we maintain a global perspective in our market strategy. Blockchain is decentralized in nature and the technology has great potential to transform various industries around the world, and we are committed to promoting its adoption in different regions.
Of course, Asia is a key regional market given its high levels of cryptocurrency penetration and user adoption. This makes it fertile ground for innovative blockchain solutions like Fuel. Additionally, Asia is a leader in the Play to Earn gaming space, from Web3 native players like Axie Infinity and The Sandbox to Web2 giants like Nexon, Square Enix, Sony, etc., highlighting the region’s strong interest in incorporating blockchain technology into the gaming industry. This presents an opportunity for us, as gaming is absolutely computationally intensive and must rely on fast and precise technology to display pixel and byte-level interactions in real time.
The growing number of notable crypto conferences taking place in Asia highlights the region’s growing importance in the global blockchain space. This trend demonstrates a maturing market and a strong interest in staying at the forefront of technological advancements. We wanted to work closely with a team that is passionate about building the Web3 community in Asia. We feel that OpenBuild aligns with our values, and we will continue to work closely together to help more people understand Fuel and the unique challenges of blockchain execution.
Foresight News: What is the Fuel roadmap and future plans? What is the approximate timeline for the mainnet? What challenges does Fuel need to overcome in the medium and long term?
Arjun Kalsy: There will be a lot of work happening over the rest of the year and sending a strong signal that we are ready to change the scalability landscape, and we will have more news and market-leading features to share soon.
The most important thing to me is to bootstrap a thriving ecosystem from both the developer and user side. We are adopting an ecosystem strategy to develop clear project paths within the Fuel ecosystem, providing a roadmap for developers, builders, and entrepreneurs to grow and evolve on Fuel. This includes incentive programs and grants to provide the best resources developers need to build the DApps of their dreams. By facilitating collaborations between founders and established projects through our network, we provide a bigger stage for founders to further increase market exposure and resource availability.
Fundamentally, Fuel Labs' long-term success depends on achieving strong technical excellence. This includes a smooth and stable mainnet launch to build user trust, demonstrating scalability and user adoption to compete with existing players, and maintaining the highest security standards to prevent vulnerabilities.
In terms of the macro picture, Fuel aims to address the sustainability of blockchain as a technology through the lens of state growth. With ever-present curiosity, we must continue to challenge the status quo and ensure that blockchain remains relevant and necessary for everyday life. This is not only about achieving Mass Adoption, but also about the steps required to get there. First, any blockchain designed today, Rollups or not, without a strategy to address state growth will eventually be limited by state bloat, regardless of its execution or data environment. Second, cryptocurrencies have arguably not yet found the “killer app” that will attract the next billion users. We are addressing this with pioneering state minimization technology, and growing our innovation ecosystem with application breakthroughs enabled by Fuel.
Foresight News: In addition to Ethereum, does Fuel, which is based on the UTXO model, consider further integration with the BTC ecosystem? Will the modular design empower more public chain ecosystems?
Arjun Kalsy: The UTXO model is highly flexible and can more easily handle different asset types. In addition, all assets are native assets on the Fuel Network, which makes it easy to build for different asset types.
Foresight News: Many people, including the Ethereum Foundation, believe that ZK is the end game. As the builder of the first Optimistic Rollup, how do you view the relationship between OP Rollup and ZK Rollup? If ZK is the end game, how will Fuel react?
Arjun Kalsy: While ZK technology is certainly promising, the relationship between Optimistic Rollups and ZK Rollups is more nuanced than simply declaring a single approach as the “final game.” As builders of the first Optimistic Rollup (OR), we recognize the strengths of both approaches.
OR has proven its reliability and efficiency over the past two years, handling large amounts of liquidity without major issues. They currently provide a proven solution for a variety of applications, including DeFi, NFTs, and gaming, while maintaining high performance and low gas fees. In addition, our research shows that it is possible to achieve fast finality with OR without compromising security. But we are not trying to ignore the potential of ZK technology. We have been actively researching and testing ZK solutions since their inception. The rapid development of zkEVM technology is exciting, but it is still in its early stages.
Our approach is to stay adaptable and keep innovating. We are committed to updating and optimizing our tech stack to support a wide range of use cases. When the time is right and ZK technology is mature enough, our tech stack can easily integrate a ZK prover and then transform our chain into a ZKRollup. Ultimately, our goal is to create a solution that best meets the needs of the blockchain ecosystem, whether it involves Optimistic Rollups, ZK Rollups, or a hybrid solution.
Foresight News: Why are you so optimistic about modular blockchains? What is the future competition between monolithic blockchains and modular blockchains? Can you tell us about the world that modular blockchains will be able to build?
Arjun Kalsy: Modular blockchains provide solutions to the scalability bottlenecks that plague traditional monolithic blockchains. By separating core functions such as consensus and execution into different layers, Fuel achieves significant improvements in transactions. This paves the way for a blockchain-ready future for Mass Adoption. In addition to scalability, modularity promotes innovation. For example, Fuel utilizes a UTXO-based execution layer that offers unique advantages over traditional account-based models. This opens up new design possibilities for developers building on Fuel, allowing them to create novel applications not possible within the limitations of a monolithic blockchain. Additionally, modular blockchain offers the potential for enhanced security. By separating functionality, potential vulnerabilities in one layer are less likely to compromise the entire system. This enables more targeted and robust security measures at every stage of the process.
In the competition between monolithic blockchains and modular blockchains, monolithic chains will always be at a disadvantage because upgradeable chains become extremely challenging. In the ever-changing world of Web3, where technology is innovating at a very fast pace, the ability of the technology stack to integrate or interface with other new technologies is extremely important, and modular chains will be able to replace and upgrade components more easily. We expect all future blockchains to adopt a modular design.
In the future of a modular world, we foresee DeFi becoming more accessible and efficient, with lightning-fast transactions and minimal costs, promoting greater financial inclusion. Blockchain games will evolve, with seamless in-game economies and enhanced user experience, thanks to faster processing and lower fees. Supply chains will be revolutionized with dedicated layers focused on data integrity and access control, resulting in greater transparency and security. The blockchain ecosystem will become more unified, with different chains communicating seamlessly, creating an interconnected landscape of specialized solutions.
Foresight News: The decoupling of Ethereum's execution layer is basically Layer2. So what kind of impact and coordination do you think Fuel, as a modular execution layer, will have with the current L2?
Arjun Kalsy: Fuel's impact on the L2 landscape will be multifaceted. Our modular architecture enables specialization and flexibility, potentially benefiting existing L2s by providing integrable features such as our UTXO-based execution layer. Our focus on interoperability with Ethereum tools and infrastructure means developers can leverage Fuel's capabilities without having to overhaul their applications.
We are committed to fostering innovation across the L2 space. Our open source philosophy and participation in standardization efforts can help establish best practices that benefit the entire ecosystem. Fuel’s unique features, such as the Sway programming language and UTXO model, push the boundaries of what is possible for L2 solutions.
Ultimately, we believe that when the water rises, the boat rises. By collaborating with other L2 projects while providing unique advantages, Fuel aims to accelerate the adoption of L2 solutions and contribute to the long-term success of Ethereum. Our goal is to be a catalyst for innovation, driving the entire ecosystem forward through collaboration and healthy competition.
