# The Problem

The blockchain landscape has advanced rapidly, but key issues still limit decentralized technology’s potential. Fuel is designed to address these fundamental challenges head-on. To understand its significance, we must first examine the core problems that blockchains face today.

## The Performance Bottleneck

Performance can be measured in various ways, such as speed to finality, total execution load capacity, transactions per second and cost-efficiency. However, traditional networks like Ethereum struggle to scale efficiently across these aspects.

One of the critical issues is load. Ethereum's computation overhead limits its processing capacity, restricting the number of transactions per second (TPS), compute units per gas unit, and overall execution capacity. Proving cryptographic evidence of transactions consumes much of this computation. The EVM, for instance, bears a significant cryptographic burden as it verifies and updates the state tree after every transaction. Ethereum's execution layer compounds this inefficiency by poorly optimizing for the underlying hardware, creating unnecessary computational overhead.

Sequential execution of these computations further constraints throughput.If you remove the state tree and focus solely on EVM computation, Ethereum could potentially achieve up to 10,000 TPS. However, the real bottleneck comes from the execution side and the cryptographic evidence required for state verification. Fuel addresses this by removing the need for a state tree and enabling computations to run in parallel, dramatically increasing efficiency. Fuel not only makes execution more efficient but also allows it to scale horizontally, making the system far more accessible to users without driving up costs or limiting throughput.

Cost-efficiency remains a problem. Ethereum's transaction costs fluctuate often, spiking to inaccessible heights during congestion. This unpredictability harms both developers and users, constraining the types of applications they can scale.

## The Scalability Dilemma

Many blockchain projects attempt to achieve scalability by increasing the hardware requirements for their nodes. This approach often makes it more expensive for users to participate, sidelining smaller users and compromising decentralization. Scalability demands more than incremental improvements. It requires fundamental changes to transaction and block processing that enhance efficiency without escalating the network's computational burden.

Early blockchains like Ethereum process transactions sequentially, executing one after another. This linear model severely limits performance on modern multi-core processors designed for parallel processing.

Parallelism, or the ability to process multiple transactions simultaneously, is one of the most promising solutions for blockchain scalability. However, enabling parallel transaction execution requires careful management of state access. If two transactions try to access the same state (for instance, attempting to spend the same funds), they can’t be processed in parallel. This leads to complex mechanisms in many blockchains that either attempt to predict state conflicts or reprocess conflicting transactions.

Fuel addresses these issues by adopting the UTXO model instead of Ethereum’s account-based model. In this model, every transaction defines its own state in the form of unspent transaction outputs, eliminating the risk of conflicting state access. As a result, Fuel can safely parallelize transaction execution, dramatically increasing throughput without compromising security. For developers, this complexity is abstracted away, allowing them to build seamlessly without needing to manage UTXOs directly.

Fuel's architecture introduces stateless primitives called predicates, enhancing efficiency and simplifying state management.This statelessness allows predicates to be trivially processed in parallel, enabling a high degree of concurrency in transaction execution. Predicates facilitate the execution of multiple operations within a single transaction while ensuring that conflicts with other transactions are avoided. Predicates don’t maintain state information between executions, enabling efficient parallel processing and significantly boosting throughput. Fuel's unique architecture enables critical performance gains, powering scalable real-world decentralized applications.

## State Growth and Sustainability

Blockchain growth inflates state size. State encompasses a blockchain's stored data: account balances, smart contract bytecode, and dApp interactions. Unchecked state growth explodes exponentially, threatening system stability. Every new transaction adds more data, and this accumulation increases the burden on node operators. As the state becomes larger, nodes must store and manage increasingly extensive amounts of data, leading to higher hardware requirements and potentially threatening decentralization.

Ethereum is currently grappling with state bloat, which many core developers consider the network’s most pressing scaling issues. As the state grows, nodes must store increasingly large amounts of data, which increases hardware requirements. The ecosystem continually explores possible solutions, such as statelessness and state expiry, but has yet to fully implement any. Ethereum's backwards compatibility limits radical innovation, while Fuel's flexibility enables more flexibility and scalable solutions.

Fuel directly addresses state growth by minimizing unnecessary data accumulation. It discourages excessive state use with op code pricing, pushing developers to optimize their applications. By streamlining data storage and management, Fuel reduces the state nodes must maintain, easing the load on operators. Its architecture efficiently handles data, ensuring the state remains manageable as transactions are processed. Our approach preserves decentralization and accessibility, allowing the network to scale without encountering the challenges of unchecked state growth.

## Interoperability and Fragmentation

Another major problem in today’s multi-chain world is interoperability. Ethereum's unified state machine succeeds largely by enabling application composition, universal asset access, and seamless dApp interactions. However, Ethereum's congestion has driven users to migrate to other L1s and L2s, fragmenting the ecosystem. Each new chain comes with its own set of challenges, including the need for separate wallets, token bridges, and onboarding processes.

Fuel is designed to reunite the fragmented ecosystem with a focus on interoperability at its core. Despite concerns about short-term fragmentation, Fuel's new VM and toolset aim to reduce ecosystem division long-term. Unlike most rollup projects, Fuel is not constrained by the EVM. Its flexible architecture enables innovative design choices for seamless interactions across multiple chains while maintaining full Ethereum compatibility. Fuel’s transaction model and block design simplify cross-chain integrations, making the movement of assets and data between chains easier to manage.

Fuel's proposed shared sequencer design prioritizes speed and efficiency, rapidly processing cross-chain transactions. Our fast sequencing empowers developers to build versatile, low-latency cross-chain applications, mitigating typical multi-chain fragmentation.

Fuel’s unique transaction and block architecture further enhances interoperability by providing execution evidence in the form of receipt roots and smart contract state roots. Verifiable proofs facilitate inter-chain interactions with Fuel, enhancing user experience and cross-chain fluidity.

## The Future: A Modular, Decentralized World

Performance limitations, poor scalability, unsustainable state growth, and minimal interoperability plague the current blockchain landscape. These issues threaten blockchain decentralization and constrain thriving applications. Fuel's innovations—UTXO-based parallelism, modular architecture, and cross-chain capabilities—overcome these limitations, setting a new blockchain infrastructure standard.
