Interviewee: Arjun Kalsy, Chief Growth Officer of Fuel Labs

Interview and article by: Peng Sun, Pzai, Foresight News

"We expect that all future blockchains will adopt 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 break through the modular boundaries with our Rollup OS, take control of the execution layer, and bring back the best features of other Layer 1 ecosystems to Ethereum."

The development of the crypto ecosystem has been accompanied by explosive growth in user interactions. In the existing monolithic Layer 1 architecture, constraints on handling a large number of concurrent transactions are relatively prominent. Therefore, discussions on scalability and efficiency improvement have been ongoing in the EVM ecosystem. When Vitalik proposed Rollups as the technological development path, the Fuel team became one of the earliest to deploy Optimistic Rollup on the mainnet. However, due to their independent construction of the execution layer based on UTXO, the user base remained limited.

Subsequently, with the rise of the modular narrative, the team began to build their V2 version and positioned it as a modular execution layer. They combined the UTXO model with the Rust syntax and integrated the Sway language, which inherits the characteristics of Solidity language, to innovate their own Fuel VM, and then built the Rollup OS that maximizes throughput and minimizes latency. These developments have made Fuel one of the emerging scalability teams in the Ethereum ecosystem.

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 was also involved in ecosystem growth work at Polygon and Mantle, and built an ecosystem that includes over 50,000 DApps. As an engineer, his passion has always been to build infrastructure that solves core issues in the blockchain field. As someone who has always been involved in the Ethereum ecosystem, he also hopes that Rollup OS can bring back the best features of other Layer 1 ecosystems 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 the invitation! Before joining Fuel Labs, I was the Ecosystem Lead at Mantle, and prior to that, I was the Vice President of Growth at Polygon. At Polygon, I pioneered partnerships with industry giants such as Reddit, Instagram, and Disney. I built the ecosystem from scratch for Mantle and Polygon, bringing in over 50,000 decentralized applications.

While I enjoyed the business aspect of the work, I consider myself fundamentally an engineer. My true passion lies in building and developing core blockchain infrastructure that can solve critical issues in the blockchain field. Polygon and Mantle had established unique market positions for themselves, and I am excited to reignite my strong desire to solve problems from scratch.

This is why I was drawn to Fuel Labs, the team behind the first Optimistic Rollup on Ethereum and the first to implement second-layer decentralization using Fuel V1. We will continue to break boundaries with our Rollup OS, an operating system for Ethereum Rollups. Unlike conventional operating systems, Rollup OS addresses scalability issues through different paradigms: minimizing state growth, taking control of the execution layer, and bringing back the best features of other Layer 1 ecosystems to Ethereum. These are the primary goals that drive our efforts to change the scalability landscape.

Foresight News: What prompted 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 of the Ethereum ecosystem. Firstly, we see Ethereum as the foundation for a programmable, decentralized world computer to solve human coordination problems. Fuel aims to further this vision 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 establish a scalable, robust economy on Ethereum's decentralized trust layer.

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

These observations led 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 minimized state execution, UTXOs, parallelism, 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 the future blockchains protected by Ethereum. Our goal is to create a flexible, efficient infrastructure to adapt to the evolving needs of the blockchain ecosystem and promote true human collaboration in the digital age.

Foresight News: What is the structure of the Fuel team? How do the teams collaborate with each other?

Arjun Kalsy: The Fuel team is a globally distributed organization with a remote-first approach, with contributors spread across the world. Similar to open-source initiatives, our structure allows every contributor in the Fuel team to think freely, encouraging individual initiative to improve the organization. Over time, we have developed a set of processes that enable teams to collaborate across time zones and make effective contributions to 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 aligned with the mission to drive the development of the entire blockchain industry.

Foresight News: Fuel completed an $80 million financing in 2022. What was the decisive moment for this financing? Are you already planning the next round of financing?

Arjun Kalsy: Fuel's supporters are long-term thinkers with deep understanding of the blockchain space. They understand the challenges faced by blockchain technology, and our goal is to address these challenges. Therefore, investors have confidence in the team's ability to deliver on this commitment. The Fuel team has delivered the first second-layer Optimistic Rollup and proven its ability to build and deploy groundbreaking technology.

State growth is a problem that has remained unsolved even a decade after Ethereum's inception. Addressing high-performance issues while minimizing state growth has long been a challenge for industry builders. Fuel has successfully addressed this issue, which is why the project has received such high praise from industry builders and blockchain technology experts.

We do not intend to conduct any further 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 encountered in the past few years?

Arjun Kalsy: Fuel Labs has made significant progress in the field of Optimistic Rollup, leveraging its first-mover advantage. However, this path has not been without challenges. Drawing lessons 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 minimized state. Using UTXO enables high throughput parallel transactions and the flexible addition of new transaction types. Stateless primitives (such as predicates and scripts) allow users to execute transactions without increasing blockchain state. Additionally, the team created Sway, a language well-suited for high-performance VM. The result is an optimized ETH Rollup operating system. The team spent 3 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 in the past two years, introducing the technology principles supporting secure and scalable blockchain transactions to the market remains an ongoing challenge, and we are actively creating the best, 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 have taken place within the team during the discussion process?

Arjun Kalsy: Since its inception, the technology has made significant progress between V1 and V2. While V1 achieved the decentralization of the second layer, a key milestone for Layer 2, Fuel Labs further advanced Rollup OS. By leveraging UTXO, parallelism, and many other innovative technologies, Rollup OS aims to maximize throughput and minimize latency. This allows Fuel to use more CPU threads and cores, which are typically idle in single-threaded blockchains. Therefore, compared to other blockchains, Fuel can provide more computing and state access. Rollup OS also introduces groundbreaking optimizations to address state growth, the next major performance bottleneck.

Tokens are fundamental components of the industry, so we focus on maintaining an asset-oriented design – meaning Fuel will natively support assets from Ethereum and other ecosystems. By doing so, we greatly reduce interoperability risks and user complexity.

Today, the Fuel stack is a combination of the Fuel VM, the programming language Sway, 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 Ethereum's large-scale adoption?

Arjun Kalsy: This is 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 exceptional user and developer experiences.

Our goal is to achieve this by focusing on three pillars: relentless innovation by pushing the possibilities of FuelVM and Sway; nurturing a sustainable, diverse, and engaged community with comprehensive resources to meet the needs of all technical proficiency levels; and exploring new possibilities for DApps innovation. We have already fully integrated on-chain order books, NFT platforms, and ultra-fast random generators, and look forward to building Fuel-native protocols at the forefront of the crypto space in DeFi, NFTs, gaming, and DePIN.

Foresight News: Why choose UTXO instead of the Ethereum account model? What problems exist in 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 a Rollups environment. Firstly, state management is very complex. Tracking every change to the account state can be cumbersome and computationally expensive. This leads to scalability bottlenecks, especially in high-throughput environments like Rollups. Secondly, concurrency issues severely hinder performance – especially compared to parallel blockchains – and the risk of conflicts and race conditions can lead to adverse outcomes.

However, by adopting a UTXO-based model, we can truly simplify the development process. UTXO simplifies state access, reduces contention in parallel processing, and enhances the design space for developers to create new features and applications using its unique properties. For example, UTXO inherently provides better privacy, facilitating the development of privacy-centric solutions. Lastly and most importantly, Fuel's UTXO design prevents the critical vulnerability of transaction malleability, enabling complex DeFi primitives like Uniswap to run smoothly on Fuel, which has never been achieved in a UTXO chain context before.

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? 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 specifically for building smart contracts. Sway draws inspiration from various languages, providing more intuitive function composition, enabling builders to deliver high-performance code with ease.

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.
• Simplifying development through tailored tools: Cutting-edge 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 powerful static analysis capabilities. This helps enforce measures such as the "check-effect-interact (CEI)" pattern. By actively identifying vulnerabilities, Sway helps developers build more secure smart contracts, reducing the risk of exploitation.

Those familiar with Rust can certainly use Sway, as it integrates its syntax and robustness, aiming to make it easy for developers familiar with other languages to understand. Compared to Solidity, Sway offers a more advanced type system with features like traits, enums, and generics, making 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 concept. Sway further enhances the developer experience by incorporating blockchain-specific concepts designed to use smart contracts more intuitively. 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 Web2 and Web3 backgrounds. In Web3, Fuel focuses on building interoperability with existing Ethereum tools and infrastructure, which will be the main 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 support. This will make it easier for developers, regardless of their previous experience, to learn Sway and build on Fuel.

Foresight News: What are the current projects in the Fuel ecosystem? What projects do you think are most suitable for Fuel, and in which areas will the Fuel team focus its support?

Arjun Kalsy: The current projects in the Fuel ecosystem include:

• Fluid Protocol: Fuel's native decentralized stablecoin, using a fixed minimum CR (collateral ratio) of 135%. Fluid Protocol is also the first liquidity-inspired protocol to support partial liquidation.
• Bako Safe: Bako Safe is a multisignature 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, providing users with the ability to trade commodities, real-world assets (RWA), and cryptocurrencies.
• Zap: Zap is a significant infrastructure project in 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-cost Layer 2 without significant code modifications, unlocking the scalability and cost advantages of Fuel for these applications.

Foresight News: What is Fuel's current market strategy and the regional markets you are focusing on? In the current bull market, the Asia-Pacific region has attracted a lot of attention from project owners and investors. Does your collaboration with OpenBuild mean 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 inherently decentralized and has the potential to revolutionize various industries globally, and we are committed to fostering its adoption in different regions.

Certainly, given the high level of cryptocurrency penetration and user adoption in Asia, 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, from Web3-native players like Axie Infinity and The Sandbox to Web2 giants like Nexon, Square Enix, and Sony, highlighting the region's strong interest in integrating blockchain technology into the gaming industry. This presents an opportunity for us, as gaming is inherently computationally intensive and requires fast, precise technology for real-time pixel and byte-level interactions.

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 and a strong interest in staying at the forefront of technological advancements. We aim to work closely with a team passionate about building the Web3 community in Asia. We believe OpenBuild aligns with our values, and we will continue to collaborate closely to help more people understand Fuel and the unique challenges of blockchain execution.

Foresight News: What are Fuel's roadmap and future plans? What is the approximate timeline for the mainnet? In the medium to long term, what challenges does Fuel need to overcome?

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

For me, the most important thing is to guide a thriving ecosystem from both the developer and user perspectives. We are adopting an ecosystem strategy, developing clear project paths within the Fuel ecosystem, providing a roadmap for developers, builders, and entrepreneurs to develop and evolve on Fuel. This includes incentive programs and grants to provide developers with the best resources to build the DApps of their dreams. By facilitating collaboration between founders and mature projects through our network, we provide founders with a larger stage to increase 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.

In terms of the macro outlook, Fuel aims to address the sustainability of blockchain technology from the perspective of state growth. With unwavering curiosity, we must continue to challenge the status quo to ensure the relevance and necessity of blockchain in everyday life. This is not only about achieving Mass Adoption but also about taking the necessary steps to achieve the goals. Firstly, any blockchain designed today, whether for Rollups or not, will ultimately be limited by state bloat if a strategy to address state growth is not implemented. Secondly, it can be said that cryptocurrency has not yet found a "killer app" that can attract the next billion users. We are addressing this issue through pioneering state minimization technology and developing our innovative ecosystem through the application breakthroughs achieved 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 to handle different asset types more easily. Additionally, all assets are native to the Fuel Network, making it easy to build for different asset types.

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

Arjun Kalsy: While ZK technology indeed holds promise, the relationship between Optimistic Rollups and ZK Rollups is more nuanced than simply declaring a single solution as the "endgame." As the first builder of Optimistic Rollup (OR), we recognize the strengths of both approaches.

OR has proven its reliability and efficiency over the past two years, 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 fast finality through OR without compromising security is highly likely. However, we are not ignoring the potential of ZK technology. We have been actively researching and testing it since the advent of ZK solutions. The rapid development of zkEVM technology is exciting but still in its early stages.

Our approach is to remain adaptive 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 is mature enough, our tech stack can easily integrate ZK provers, transforming 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 hybrid solutions.

Foresight News: Why are you so optimistic about modular blockchain? 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 blockchain provides a solution to the scalability bottleneck that plagues traditional monolithic blockchains. By separating core functions such as consensus and execution into different layers, Fuel has achieved significant improvements in transactions. This paves the way for the future Mass Adoption of blockchain. In addition to scalability, modularity also promotes innovation. For example, Fuel leverages a UTXO-based execution layer, which has unique advantages compared to the traditional account-based model. This opens up new design possibilities for developers building on Fuel, allowing them to create novel applications that are not possible within the constraints of monolithic blockchains. Furthermore, modular blockchain offers the potential for enhanced security. By separating functions, potential vulnerabilities in one layer are less likely to compromise the entire system. This allows for 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 as upgradable chains become increasingly challenging. In the rapidly changing Web3 world, the ability to integrate or interface with other new technologies is crucial, and modular chains will be able to more easily replace and upgrade components. We expect that all future blockchains will adopt modular design.

In the future of the modular world, we expect 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, with seamless in-game economies and enhanced user experiences, thanks to faster processing speeds and lower fees. Supply chains will undergo revolutionary changes through a dedicated layer focused on data integrity and access control, increasing transparency and security. The blockchain ecosystem will become more unified, with different chains seamlessly communicating, creating an interconnected landscape of specialized solutions.

Foresight News: The decoupling of the Ethereum execution layer is essentially Layer 2, so what impact and cooperation do you think Fuel, as a modular execution layer, will have with the current L2?

Arjun Kalsy: The impact of Fuel on the L2 landscape will be multifaceted. Our modular architecture achieves specialization and flexibility, which may benefit existing L2 solutions by providing integrable features (such as our UTXO-based execution layer). We are focused on interoperability with Ethereum tools and infrastructure, meaning 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 ethos and participation in standardization work can help establish best practices beneficial to 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 a rising tide lifts all boats. 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.

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