Exclusive Interview with Fuel's Chief Growth Officer: Breaking Through Modular Boundaries, All Chains Will Be Modular in the Future

Interviewee: Arjun Kalsy, Chief Growth Officer of Fuel Labs

Interview and writing: Peng Sun, Pzai, Foresight News

"We expect all future blockchains to adopt a modular design," Arjun Kalsy, Chief Growth Officer of Fuel, told Foresight News when discussing the competition between monolithic blockchains and modular blockchains. When talking about the Fuel team, he emphasized, "We hope to push the boundaries of modularity with our Rollup OS, mastering the execution layer and bringing the best features of other Layer 1 ecosystems back to Ethereum."

The development of the crypto ecosystem has been accompanied by explosive growth in users and interactions, and the bottlenecks in processing a large number of concurrent transactions in the existing monolithic Layer 1 architecture are relatively prominent. Therefore, discussions about scalability and efficiency improvements have been ongoing in the development of the EVM ecosystem. When Vitalik proposed Rollups as a technological development route, the Fuel team became one of the first to deploy Optimistic Rollups on the mainnet, but due to their unique UTXO-based execution layer, user adoption was limited.

Subsequently, with the rise of the modular narrative, the team began building their V2 version, positioning it as a modular execution layer that combines the UTXO model with the innovative Sway language, which inherits Rust syntax while integrating features of Solidity, thus creating their own Fuel VM and building a Rollup OS that maximizes throughput and minimizes latency. These developments have made Fuel one of the rising scalability teams in the Ethereum space.

The background of the Fuel team is quite interesting; co-founder John Adler is also a co-founder of Celestia, and CEO Dodson is an early participant in the Ethereum ecosystem. Before joining Fuel Labs, Arjun Kalsy worked on ecosystem growth at Polygon and Mantle, building an ecosystem that includes over 50,000 DApps. As an engineer, his passion has always been in building infrastructure that addresses core issues in the blockchain space, and as someone who has navigated within the Ethereum ecosystem, he hopes that Rollup OS can bring the best features of other Layer 1 ecosystems back to the Ethereum ecosystem.

Foresight News: Please briefly introduce yourself and your team, why did you choose to join Fuel, and what was your experience in the crypto space before that?

Arjun Kalsy: Thank you for the invitation! Before joining Fuel Labs, I was the ecosystem lead at Mantle, and prior to that, I was the VP of Growth at Polygon. At Polygon, I was the first to establish partnerships with industry giants like Reddit, Instagram, and Disney. I built the ecosystems of Mantle and Polygon from the ground up, bringing in over 50,000 decentralized applications.

While I enjoy working on the business side, I believe my core is as an engineer, and my true passion lies in building and developing core blockchain infrastructure that can solve key issues in the blockchain space. Polygon and Mantle have already carved out unique market positions for themselves, and I am excited to reignite my strong desire to address the fundamental challenges of going from zero to one.

That's why I was attracted to Fuel Labs, the team behind the first Optimistic Rollup on Ethereum and the first team to achieve two-phase decentralization using Fuel V1. We will continue to push boundaries with our Rollup OS, which is an operating system for Ethereum Rollups. Rollup OS is different from existing operating systems as it addresses scalability issues through different paradigms: minimizing state growth, mastering the execution layer, and bringing the best features of other Layer 1 ecosystems back to Ethereum. These primary goals drive our efforts to change the scalability landscape.

Foresight News: What motivated you to participate in building Fuel, and what kind of product do you hope Fuel Labs will become?

Arjun Kalsy: The motivation behind Fuel stems from two key observations about the Ethereum ecosystem. First, we see Ethereum as the foundation for solving human coordination problems, with a vision of a programmable, decentralized world computer. Fuel aims to further this goal by creating blockchain infrastructure that can be owned and operated by ordinary users, paving the way for a fair and just digital economy. We believe that by addressing state growth and blockchain sustainability issues, Fuel can build a scalable and robust economy on Ethereum's decentralized trust layer.

Secondly, we recognize that while the rise of modular blockchains and Layer 2 solutions offers significant scalability advantages, it also brings challenges in fragmentation, interoperability, and cross-chain bridge risks, and existing blockchain architectures were not designed with this modular future in mind.

These observations prompted us to create an evolved version of the Ethereum Virtual Machine (EVM) — Rollup OS. Our goal is to directly address these challenges and support Ethereum's Rollup-centric scalable future vision. Fuel combines the best features of existing blockchains, such as state-minimized execution, UTXOs, parallelization, asset-oriented design, interoperability, and security — along with native account abstraction and support for all network wallets.

Ultimately, we envision Fuel as the driving force behind future blockchains that will be protected by Ethereum. Our goal is to create a flexible and efficient infrastructure that adapts to the ever-changing needs of the blockchain ecosystem and facilitates true human collaboration in the digital age.

Foresight News: What is the structure of the Fuel team like? How do teams collaborate?

Arjun Kalsy: The Fuel team is a remote-first, globally distributed organization with contributors from all over the world. Similar to open-source projects, our structure allows every contributor in the Fuel team to think freely and encourages individual initiative to improve the organization. Over time, we have gradually formed a set of processes that enable teams to collaborate across time zones and contribute effectively to project development. 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 allows us to build original research and cutting-edge technological solutions aligned with our mission to drive the entire blockchain industry forward.

Foresight News: Fuel completed $80 million in funding in 2022; what was the decisive moment for this funding? Are there plans for the next round of funding?

Arjun Kalsy: Fuel's supporters are long-term thinkers with deep insights into the blockchain space. They understand the challenges faced by blockchain technology, and our goal is to address these challenges, so investors are confident in the team's ability to deliver on this promise. The Fuel team has already delivered the first two-phase Optimistic Rollup and demonstrated its capability to build and deploy groundbreaking technology.

State growth is an issue that remains unresolved even a decade after Ethereum's inception. Minimizing state growth while addressing high-performance issues has long been a challenge for industry builders. Fuel has successfully tackled this problem, which is why the project is highly regarded among industry builders and blockchain technology experts.

We do not plan to conduct any further sales and will launch the mainnet in the fourth quarter of this year.

Foresight News: What has been the biggest obstacle/difficulty Fuel has faced in the past few years?

Arjun Kalsy: Fuel Labs has made significant progress in the Optimistic Rollup space due to its clear first-mover advantage. However, this path has not been without challenges. Learning from the challenges faced by Ethereum and other L1 blockchains, the team proposed a completely different approach and built the virtual machine from scratch to achieve high performance and state minimization. Using UTXOs allows for high-throughput parallel transactions and the flexible addition of new types of transactions. Stateless primitives (such as predicates and scripts) enable users to execute transactions without increasing blockchain state. Additionally, the team created Sway, a language well-suited for high-performance VMs. The end result is an optimized ETH Rollup operating system. The team spent three years perfecting this architecture. Furthermore, when we first launched in 2021, the concepts of modular blockchains, execution layers, and state growth were still very unfamiliar. Considering that scalability solutions have only recently received the attention they deserve over the past two years, introducing the technical principles that underpin secure and scalable blockchain transactions to the market remains an ongoing challenge. We are actively fostering an optimal, developer-friendly environment to bridge the knowledge gap.

Foresight News: What changes has Fuel undergone from V1 to V2? Why switch to an operating system like "Rollup OS"? What interesting ideas and discussions occurred within the team during this process?

Arjun Kalsy: Since Fuel's inception, the technology has undergone significant advancements between V1 and V2. While V1 achieved two-phase decentralization, a key milestone for Layer 2, Fuel Labs has further pushed the Rollup OS by leveraging UTXOs, parallelization, and many other innovative technologies, aiming to maximize throughput and minimize latency. This allows Fuel to utilize more CPU threads and cores, which are typically idle in single-threaded blockchains. Therefore, compared to other blockchains, Fuel can offer more computation and state access. Rollup OS also introduces groundbreaking optimizations to address state growth, which is the next major performance bottleneck.

Tokens are fundamental components of the industry, so we focus on maintaining an asset-oriented design — this means Fuel will provide native support for assets from Ethereum and other ecosystems. By doing so, we significantly reduce interoperability risks and user complexity.

Today, the Fuel stack is a combination of the Fuel VM virtual machine, the Sway programming language, and the integrated toolchain Forc, creating a complete operating system to run Rollups. We expect to deploy several Fuel chains covering various use cases in the near future.

Foresight News: What are the advantages and characteristics of Fuel as a modular execution layer, and what breakthroughs will Fuel bring to the mass adoption of Ethereum?

Arjun Kalsy: That's a great question. Undoubtedly, our mainnet launch will showcase our scalability capabilities, but if distilled into three key points, they would be state sustainability, high throughput, and an excellent user experience and developer experience.

Our goal is to achieve this by focusing on three pillars: relentlessly pursuing innovation by pushing the boundaries of what Fuel VM and Sway can do; fostering a sustainable, diverse, and engaged community with comprehensive resources to meet the needs of all levels of technical proficiency; and exploring new possibilities for DApp innovation. We have fully integrated on-chain order books, NFT platforms, and ultra-fast random generators, and we look forward to building Fuel-native protocols at the forefront of crypto fields such as DeFi, NFTs, gaming, and DePIN.

Foresight News: Why choose UTXO over the Ethereum account model? What issues exist with the current mainstream account model, and can the "stateless" UTXO model enhance 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 presents some limitations in the context of Rollups. First, state management is very complex. Tracking every change in account state can be cumbersome and computationally expensive. This can lead to scalability bottlenecks, especially in high-throughput environments like Rollups. Secondly, concurrency issues severely hinder performance — especially compared to parallelized blockchains — as conflicts and race conditions can lead to undesirable outcomes.

However, by adopting a UTXO-based model, we can 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 using its unique properties. For example, UTXOs inherently provide better privacy, facilitating the development of privacy-centric solutions. Most importantly, Fuel's UTXO design prevents the critical vulnerability of transaction malleability, allowing complex DeFi primitives like Uniswap to run smoothly on Fuel, which has never been achieved in the context of UTXO chains before.

Foresight News: What are the features of the Sway language developed by Fuel? It seems relatively unfamiliar to most people; is the learning curve relatively steep? Additionally, how will you build the Sway developer community and incentivize 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, offering a more intuitive combination of features that enables builders to easily deliver high-performance code.

Here are some key features of Sway:

• Modern design for robust applications: Sway has a comprehensive type system suitable for a wide range of blockchain applications. This built-in structure helps developers write clearer, more maintainable code and reduces the likelihood of errors. Importantly, learning Sway allows you to build everything across the entire blockchain stack.
• Simplified development through tailored tools: State-of-the-art development tools work hand in hand with Sway. These tools streamline 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 robust static analysis capabilities. This helps enforce measures such as the "Check-Effect-Interaction (CEI)" pattern. By proactively identifying vulnerabilities, Sway helps developers build safer smart contracts, reducing the risk of exploitation.

Familiarity with Rust will certainly help in using Sway, as it integrates its syntax and robustness and is designed to be easily understood by developers familiar with other languages. Compared to Solidity, Sway offers a more advanced type system with features like traits, enums, 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 lifetimes — a potentially challenging and complex concept. Sway further enhances the developer experience by incorporating blockchain-specific concepts designed for more intuitive use of smart contracts. 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 focuses on building interoperability with existing Ethereum tools and infrastructure, which will be a major draw for builders 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 current projects are in the Fuel ecosystem? What do you think are the most suitable projects for Fuel, and which track areas will the Fuel team focus on supporting?

Arjun Kalsy: Current projects in the Fuel ecosystem include:

• Fluid Protocol: Fuel's native decentralized stablecoin, using a fixed minimum collateral ratio (CR) of 135%. Fluid Protocol is also the first liquidity-inspired protocol to support partial liquidation.
• 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 trading platform built on the Fuel network, allowing users to trade commodities, real-world assets (RWAs), and cryptocurrencies.
• Zap: Zap is an important infrastructure project within the Fuel ecosystem. It acts as a bridge, allowing existing Web3 and DeFi applications built on Ethereum to seamlessly interact with Fuel's high-speed, low-fee Layer 2. These applications can unlock Fuel's scalability and cost-effectiveness advantages without significant modifications to their code.

Foresight News: What is Fuel's current market strategy, and which regional markets are you focusing on? In the current bull market, the Asia-Pacific region has attracted significant attention from project owners and investors; does your collaboration with OpenBuild indicate a more optimistic view of the Asia-Pacific market?

Arjun Kalsy: At Fuel Labs, we maintain a global perspective in our market strategy. Blockchain is inherently decentralized, and this technology has immense potential to transform industries worldwide, and we are committed to promoting its adoption in different regions.

Of course, given Asia's high levels of cryptocurrency penetration and user adoption, it is a key regional market. This makes it fertile ground for innovative blockchain solutions like Fuel. Additionally, Asia is a leader in the Play-to-Earn gaming space, highlighting the region's strong interest in integrating blockchain technology into the gaming industry, from Web3-native players like Axie Infinity and The Sandbox to Web2 giants like Nexon, Square Enix, and Sony. This presents us with an opportunity, as gaming is undoubtedly compute-intensive and must rely on fast and precise technology to display pixel and byte-level interactions in real-time.

The increasing number of prominent crypto conferences held in Asia highlights the region's growing importance in the global blockchain space. This trend indicates a maturing market, with a strong interest in staying at the forefront of technological advancements. We hope to work closely with a team passionate about building a Web3 community in Asia. We believe OpenBuild aligns with our values, and we will continue to collaborate closely to help more people understand the unique challenges of Fuel and blockchain execution.

Foresight News: What is the roadmap and future plans for Fuel? What is the rough timeline for the mainnet? What challenges does Fuel need to overcome in the medium to long term?

Arjun Kalsy: A lot of work will be done in the remaining time this year, sending a strong signal that we are ready to change the scalability landscape, and we will share more news and market-leading features soon.

For me, the most important thing is to guide a thriving ecosystem from both developer and user perspectives. We are adopting an ecosystem strategy to develop clear project pathways within the Fuel ecosystem, providing developers, builders, and entrepreneurs with a roadmap for growth and evolution on Fuel. This includes incentive programs and grants to provide developers with the best resources they need to build their dream DApps. By facilitating collaboration between founders and established projects through our network, we provide founders with a larger stage to further enhance market exposure and resource availability.

Fundamentally, the long-term success of Fuel Labs 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.

From a macro perspective, Fuel aims to address the sustainability issues of blockchain as a technology through the lens of state growth. With a consistent curiosity, we must continue to challenge the status quo to ensure that blockchain remains relevant and necessary in everyday life. This is not just about achieving mass adoption but also about the steps needed to achieve that goal. First, any blockchain designed today, whether or not it is Rollups, will ultimately be limited by state bloat if it does not have a strategy to address state growth, regardless of its execution or data environment. Secondly, it can be said that cryptocurrencies have yet to find a "killer app" that can attract the next billion users. We are addressing this issue through pioneering state-minimization technology and growing our innovative ecosystem through breakthroughs enabled by Fuel.

Foresight News: Besides Ethereum, is Fuel considering further integration with the BTC ecosystem based on the UTXO model? Will modular design empower more public chain ecosystems?

Arjun Kalsy: The UTXO model offers a high degree of flexibility, making it easier to handle different asset types. Additionally, all assets are native to the Fuel Network, which simplifies building for different asset types.

Foresight News: Many, including the Ethereum Foundation, believe that ZK has become the endgame. As the builder of the first Optimistic Rollup, how do you view the relationship between OP Rollup and ZK Rollup? If ZK has become the endgame, how would Fuel respond?

Arjun Kalsy: While ZK technology is indeed promising, the relationship between Optimistic Rollups and ZK Rollups is more nuanced than simply declaring one solution as the "endgame." As the builder 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, capable of handling significant liquidity without major issues. They currently provide proven solutions for various applications, including DeFi, NFTs, and gaming, while maintaining high performance and low gas fees. Additionally, our research indicates that achieving rapid finality through OR without compromising security is quite feasible. However, we do not overlook the potential of ZK technology. Since the advent of ZK solutions, we have been actively researching and testing it. The rapid development of zkEVM technology is exciting, but it is still in its early stages.

Our approach is to remain adaptable and continuously innovate. 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 matures sufficiently, our tech stack can easily integrate ZK provers, transforming our chain into a ZK Rollup. 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 hybrid solutions.

Foresight News: Why are you so optimistic about modular blockchains? What is the future competition between monolithic blockchains and modular blockchains? Can you give us an overview of 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 like consensus and execution into different layers, Fuel achieves significant improvements in transaction processing. This paves the way for a future of Mass Adoption that blockchains are ready for. Beyond scalability, modularity also fosters innovation. For example, Fuel leverages a UTXO-based execution layer, which has unique advantages compared to traditional account-based models. This opens up new design possibilities for developers building on Fuel, enabling them to create novel applications that cannot be realized under the constraints of monolithic blockchains. Additionally, modular blockchains offer the potential for enhanced security. By separating functionalities, potential vulnerabilities in one layer are less likely to jeopardize the entire system. This allows for more targeted and robust security measures to be implemented at every stage of the process.

In the competition between monolithic and modular blockchains, monolithic chains will always be at a disadvantage as upgradable chains become extremely challenging. In the fast-evolving Web3 world, the ability of a tech stack to integrate or interface with other new technologies is crucial, and modular chains will be able to more easily swap out and upgrade components. We expect all future blockchains to adopt modular designs.

In a modular world, we anticipate that DeFi will become more accessible and efficient, with lightning-fast transaction speeds and minimal costs, promoting greater financial inclusion. Blockchain gaming will continue to evolve, featuring seamless in-game economies and enhanced user experiences thanks to faster processing speeds and lower fees. Dedicated layers focusing on data integrity and access control will revolutionize supply chains, enhancing 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 the Ethereum execution layer essentially means Layer 2. How do you think Fuel, as a modular execution layer, will impact and collaborate with existing L2s?

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 like our UTXO-based execution layer. Our focus on interoperability with Ethereum tools and infrastructure means that developers can leverage Fuel's capabilities without completely overhauling their applications.

We are committed to fostering innovation across the entire 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, expand the possibilities for L2 solutions.

Ultimately, we believe that when the tide rises, all boats rise. By collaborating with other L2 projects while offering 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.