The Fuel Network introduces how it will provide an efficient computing environment through parallel computing and state sharding.

In 2022, the Layer2 network Fuel Network, which raised $80 million in funding, recently released its Beta-5 testnet. It is expected to launch its mainnet in the third quarter of this year. What capabilities does Fuel Network have to address current issues such as transaction performance limits and state bloat?

Introduction to Fuel Network

Modular Execution Layer

Fuel Network is a decentralized Layer2 network based on Optimistic Rollup, focusing on the execution layer that processes transaction computations in a modular blockchain. The concept behind Fuel Network is to maintain more bandwidth and computational power while using fewer resources. Fuel Network aims to optimize the parallelization, state minimization execution, and interoperability of existing blockchains, enhancing the computational capabilities of decentralized networks.

Unlike mainstream Rollups such as Arbitrum, the execution layer provided by Fuel Network is not simply a replica of existing structures, but through innovative virtual machines, programming languages, and developer tools, it offers more efficient computational capabilities.

Fuel Network Technical Architecture

Fuel Network's technical stack can be primarily divided into three parts:

• FuelVM: Utilizing the UTXO model for state access and allowing all nodes to identify accounts involved in transactions, mapping dependency relationships before execution to enable Fuel to utilize more CPU threads. Fuel's core functionalities including parallel computation, state minimization, and enhanced interoperability stem from the innovative design of the FuelVM virtual machine.
• Sway: A programming language designed for blockchain environments, combining Solidity and Rust to integrate the strengths of both languages, enabling developers to easily develop using these languages.
• Forc Toolchain: Tools that allow developers to easily develop and deploy dApps on the Fuel chain, enabling customization and extension of functionalities to meet various developer needs.

Issues Addressed by Fuel Network

The Ethereum ecosystem is currently experiencing a period of explosive growth in modular L2 chains. While Ethereum has made significant progress in performance and functionality through Rollups, there still exists a significant gap in computational capabilities compared to other competing chains.

With FuelVM, Fuel Network aims to enhance the three major computational performances of existing Rollups:

• Parallel Computation: Performance-Oriented. Fuel Network meets the increasing demand for transaction bandwidth by executing transactions in parallel.
• State Minimization: Sustainability-Oriented. Based on the UTXO design, Fuel Network significantly reduces state growth during transaction execution, reducing node hardware burdens and enhancing the decentralization for long-term development.
• Enhanced Composability: Ecosystem-Oriented. Fuel Network achieves block-level composability through a special smart contract introspection mechanism, improving overall network and cross-network security.

The following discussion will focus on the unique virtual machine FuelVM and the three major innovations and advantages it brings.

Low Computational Performance: Parallel Computation

Traditional EVM executes only one transaction at a time, causing inefficiency as other transactions must wait in line. Parallel computation allows multiple transactions to be executed among multiple processors, reducing the delay in transaction confirmation without waiting for the execution of other transaction blocks.

FuelVM implements improvements to the EVM that developers have been suggesting for years, improvements that have been delayed due to the need for compatibility.

By using the UTXO model for strict state access and managing hardware through FuelVM, all nodes can identify accounts involved in transactions and map dependency relationships before execution. This allows Fuel to utilize more CPU resources, typically idle in single-threaded blockchain environments. Thus, Fuel can provide more computational, state access, and transaction throughput than single-threaded blockchains.

State Bloat: State Minimization

The state refers to the "latest ledger information of the decentralized network," containing all account data and token distributions in the network. Traditionally, state data often requires significant disk access for quick node retrieval, being the slowest processing step in transactions apart from signatures and hashing. Storing state is an undeniable cost and a barrier to network performance development.

Unlike historical data that can be discarded or expired, data for each address account cannot be discarded. As the network's usage lifespan increases, the state size continues to bloat, becoming a concern for future network performance.

Recommended Reading: Why is State Bloat the Ultimate Boss of Blockchain Scalability Development Bottlenecks?
Recommended because: This article describes the current state bloat challenges and solutions by Fuel Network's founder, providing a clearer understanding of the unique value proposition of Fuel Network, serving as a prelude to this article.

Based on these issues, Fuel Network provides native state rehydration functionality through FuelVM's design. Developers on FuelVM can use the dehydrate function to manage state, dehydrating the state when not needed and rehydrating it when necessary to reduce the overall state size.

Unlike traditional methods such as Ethereum, which access the full network state at all times, Fuel Network increases the efficiency of accessing state resources by compressing state and deactivating it.

Furthermore, Fuel Network provides other designs for developers to minimize state growth when developing smart contracts:

• Scripts: Scripts, similar to smart contracts, contain computational logic stored within transactions rather than in the state, reducing state size. Additionally, scripts can be executed through transactions, calling zero or multiple smart contracts.
• Predicates: Predicates are lightweight, stateless smart contracts responsible for pure transaction authorization mechanisms. Predicates can only access historical transaction data and cannot access the latest state of the chain.

Fuel Network's architecture aims to integrate all these features to achieve state minimization execution, ensuring that network performance for long-term development is not hindered by state.

Enhanced Cross-Network Interoperability: Introspection

Introspection in the blockchain industry refers to the ability of smart contracts to inspect, analyze, understand their own attributes, and the blockchain state. This feature allows smart contracts to automatically make decisions based on the current network transactions, state, other contracts, and their own execution results.

Introspection is a powerful feature that enables more complex, dynamic, and responsive applications on the blockchain. It allows contracts to adjust their behavior based on network conditions, enhancing cross-chain functionality and the efficiency of decentralized applications (dApps).

Additionally, Fuel Network offers innovative transaction models, such as triggering contracts with multiple input variables or even accepting predicates, maximizing the utility and composability potential of contracts.

Development Status of Fuel Network

The team officially launched the Beta-5 testnet this month, with the mainnet expected to go live in the third quarter of this year.

Team: Overlapping Core Members with Celestia

Fuel Network has significant ties to Celestia, emphasizing modular design. John Adler, who is a co-founder of both projects, leads overlapping core team members. The two projects complement each other in different aspects within the same field. Celestia focuses on the data availability layer, while Fuel Network enhances execution layer efficiency. It is expected that there may be more collaboration between the two projects in the future, as hinted at in their whitepapers.

Fuel Network focuses on computation while reducing state storage; Celestia focuses on storage efficiency.

Funding: $80 Million Raised

Founded in 2019, Fuel Labs received seed funding in 2021 and completed an $80 million Series A financing in 2022, led by Blockchain Capital, making it a relatively large fundraising project at the time.

Marketing: Market Ecosystem Still Developing

Users can download the official Web3 wallet—Fuel Wallet—from the official website and claim test tokens from the faucet. Users can also use the official cross-chain bridge from the Sepolia testnet to access protocols on the Fuel Beta-5 testnet. However, most protocols on this testnet are still in the development stage.

On the Fuel Network Beta-4 testnet, the ecosystem only includes basic DeFi services such as DEX, lending, asset cross-chain bridges, an NFT marketplace, and on-chain analytics tools. Currently, there are no innovative products leveraging network features.

Unconventional Execution Layer Network

Fuel Network, with its primary focus on the execution layer, does not aim to continuously optimize existing structures but rather to design innovative virtual machines, parallel processing mechanisms, and state minimization in different ways to achieve higher computational efficiency, indeed possessing certain advantages.

However, it is important to note that improving efficiency is gradually becoming a red ocean market in the blockchain field.

Various Rollups, competing chains, and even stateless infrastructure outside of blockchain are continuously optimizing to provide the most efficient computational space. Whether Fuel Network, with its focus on computation, can gain a significant foothold in this market remains a considerable challenge.

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