Fuel - Building the next generation of blockchains
At Fifty Finney, we have discussed how blockchains should scale for decentralized applications (Dapps) to become mainstream. We have examined key Dapp market segments, including Decentralized Finance(DeFi), Game Finance (GameFI) or Play-to-Earn Games, and several other sectors. We have agreed that the future is modular. In our previous article, Celestia — Modular Blockchains and The App-Chain Thesis, we explore the merit of modular blockchains. In this article, we spotlight Fuel, a modular execution layer that delivers high levels of security and throughput; we will explore the merits of modular execution and provide thorough insights into the benefits Fuel offers.
To understand Fuel thoroughly, we would need to examine the following concepts:
Virtual Machines
Modularity
The Key Functions of Blockchains
The Blockchain Trilemma.
Let's dive in!
What is a Virtual Machine
A virtual machine simply refers to a digital representation of a computer. Virtual machines can perform several functions that a physical computer can, including installing and running programs and operating systems, storing data, connecting to networks, and performing other computations. In Web 3, virtual machines serve majorly as an environment to execute smart contracts and are maintained by a decentralized network of clients. One of the foremost virtual machines that come to mind in crypto is the Ethereum Virtual Machine(EVM).
Some other prominent Virtual Machines in use throughout crypto include Neon EVM, Algorand Virtual Machine, Neo Virtual Machine, Solana Virtual Machine, RSK Virtual Machine, Parastate SSVM, etc. We will touch on the uniqueness of Fuel’s Virtual Machine in later segments.
What is Modularity
Modularity is a term used to describe when the functions of a blockchain are separated and handled by different parts of the blockchain. To understand modularity, it is essential to understand the four basic functions typically performed by a blockchain. These functions are
Execution: Transactions are to be processed and executed on a blockchain. A user would sign a transaction, deploy a smart contract or initiate the transference of assets. The blockchain must be able to process and execute each of these transactions. On the Ethereum blockchain, rollups spun off, trying to specialize in the execution of transactions.
Consensus: All transactions have to be ordered and finalized on the blockchain. Blockchains employ different mechanisms to ensure general agreement amongst participants of the blockchain as to the order of transactions.
Settlement: This function involves dispute resolution and how the blockchain determines valid transactions. The settlement function is typically associated with rollup-type construction that needs external verification for transactions conducted on the rollup.
Data Availability: Blockchains must ensure that data is available to verify transactions and meet other demands.
Blockchains that combine these four functions are Monolithic, while blockchains that separate these functions into separate layers are Modular.
Consider the image below:
Several modular blockchains specialize in one or more of the different vital functions of the blockchain.
The Modular blockchain design currently serves as the best solution to the blockchain trilemma;
Decentralization: creating a blockchain with no central point of control
Scalability: the ability of a blockchain to steady growth in the number of transactions performed per time.
Security: the ability of the blockchain to defend itself from malicious actors.
Some Cosmos and Celestia are prime examples of Modular blockchains. Celestia, for instance, singles out the Data Availability and Consensus function as its primary role in the Celestia ecosystem.
Fuel, on the other hand, specializes as an execution layer. So, how does Fuel Operate? What makes Fuel so unique?
Fuel - An Overview
Fuel is a modular execution layer focused on delivering the highest throughput and security. Fuel is able to achieve this feat by:
Parallel Transaction Execution
Fuel Virtual Machine
A superior developer experience
Parallel Transaction Execution
Fuel offers high levels of processing capacity since transactions are processed in parallel. On a high level, Fuel uses more threads and cores of the CPU, which would typically be idle in a blockchain that processes transactions in a single thread. In the EVM, for example, transactions must be ordered sequentially since it is often unclear if there are dependencies between transactions. On the other hand, Fuel uses the UTXO model that identifies dependencies between transactions via a state access list.
Fuel Virtual Machine
There have been several improvements suggested to the EVM. However, several of these improvements are impossible to implement without disrupting compatibility. Thus, these improvements would introduce a challenge of backward incompatibility. Fuel VM leans into several of these improvements and offers a better virtual machine than the EVM. Some improvements implemented on fuel that had been suggested on the EVM include Ethereum Improvement Proposal (EIP)-2098, EIP-3074, EIP-4758, EIP-86, and Easy Parallelization.
A superior developer experience
Fuel introduces the use of Sway language and Forc. In addition, fuel maintains comprehensive documentation and toolings to ensure developers have a splendid experience.
Benefits of Fuel
Considering the architectural tradeoffs implemented by fuel, it becomes pertinent to ask what the key improvements are over the EVM and other virtual machines. Some key areas Fuel displays superiority include:
User sovereignty because of fraud provability - This feature creates support for trust-minimized light clients. Hence users do not have to run a full node to participate in the Fuel ecosystem. Furthermore, since the fuel network would consist of trust-minimized light clients, combining this feature with shared data availability would allow for creating trust-minimized bridges.
Fuel is configurable as a Layer one, a roll-up, a side chain, or a state channel. Making it very powerful and flexible for a wide range of implementation architectures. As a Modular Execution Layer, Fuel can perform in various categories; all a developer has to do to take advantage is to switch a few modules in the client.
Final Words
In several of our previous articles, we at Fifty Finney have continued to highlight that we are excited about the possibilities of a modular future and what it means for the evolution and adoption of blockchains as the standard in different industries. We believe fuel would play a key role alongside several other key technologies building in the modular space to give rise to the proliferation of programmable and scalable blockchains.
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