State of Fuel Q1 2025

Key Insights

• Fuel launched the FS-1 dApp Program on January 15, 2025, a strategic seasonal initiative to accelerate ecosystem growth by supporting six foundational projects. The program wrapped up Season 1 on March 3, 2025, driving developer engagement and expanding decentralized application diversity on Fuel Ignition.
• Fuel Ignition saw its daily average transactions normalize at 128,000, down 21.8% QoQ.
• Fuel’s Ignition’s leading DeFi applications, Swaylend and Mira Protocol, account for 90.7% of DeFi TVL.
• The project team launched a decentralized sequencer built with the Cosmos SDK, enhancing network resilience by eliminating single points of failure and enabling distributed transaction ordering. This implementation strengthens trustlessness, improves security, and sets the foundation for shared sequencing across multiple rollups.
• Mira Protocol has facilitated over $164.5 million in volume on Fuel Ignition since its launch. The daily average DEX volume was $745,173, down 45.5% QoQ.

Primer

Fuel (FUEL) is an Ethereum Layer-2 powered by the FuelVM, built to enhance PSI (parallelization, state-minimized execution, interoperability). Fuel’s technology stack also includes the Sway programming language optimized for blockchain development. The network provides a suite of developer tools, such as Forc (Fuel Orchestrator) and Fuelup (toolchain manager), along with SDKs and APIs to facilitate development.

FuelVM utilizes a UTXO model with strict state access lists, which allows transactions to be executed in parallel. This capability enables the network to leverage multiple CPU threads and cores, increasing compute power, state access, and transaction throughput compared to traditional single-threaded blockchains.

Sway is a custom-built, domain-specific programming language optimized for blockchain development. It combines Rust’s safety mechanisms with Solidity’s smart contracts, including built-in contract storage and blockchain functionalities, which makes integrating blockchain-specific syntax easier. Sway prioritizes compile-time analysis and safety by offering static auditing for smart contracts. It also features a modular backend that can be adapted to different blockchain architectures.

The Fuel network refers to the broader Fuel ecosystem, encompassing its technology, community, and infrastructure. The network leverages Ethereum for data availability and features a one-second block time, with a focus on mitigating state growth and state bloat issues. Fuel v1 was the first to reach the status of being a Stage 2 Appchain Optimistic Rollup.

Fuel Ignition, an Optimistic rollup on the Fuel Network, marks the transition from development to a fully operational network. Fuel Ignition was built with state-growth and state-bloat mitigation in mind, addressing what many consider blockchain’s fundamental bottleneck and benefits from a hybrid proving system utilizing zero-knowledge proofs (zkps). Fuel Ignition has low fees and high throughput, achieving over 600 transactions per second (TPS) when using Ethereum data availability and up to 21,000 TPS per CPU core, making it one of the most scalable Ethereum Layer-2 solutions. Fuel Ignition launched on Oct. 15, 2024, and the Token Generation Event (TGE) for FUEL occurred on Dec. 19, 2024.

Website / X (Twitter) / Forum / FuelVM

Key Metrics

Financial Analysis

Market Cap

Q1 2025 was the first full quarter since FUEL’s TGE on December 19, 2024. During the quarter, FUEL’s circulating market cap decreased 79.8% to $49.9 million from $247.3 million, and the token price declined 83.5% to $0.01 over the same period.

Onchain Costs

Onchain costs on Fuel Ignition can be an indicator of network activity, rising in response to increased usage and declining when activity slows. Blobs and calldata relate to data storage and availability, while compute covers transaction execution and overhead accounts for fixed operational expenses. Rollup operators optimize costs by minimizing calldata usage (favoring blobs) and reducing compute intensity through efficient execution models like parallel processing.

What are these costs:

• Blobs (Data Availability Costs): These costs arise from storing large amounts of batched transaction data offchain while ensuring it remains accessible. Rollups post blob data to Ethereum using Proto-Danksharding with EIP-4844, which significantly reduces calldata costs. This cost scales with the volume of transactions that require data availability.
• Compute (Execution Costs): This represents the cost of executing smart contracts and processing transactions on the rollup. It is influenced by factors such as the complexity of smart contract operations, the number of transactions, and gas fees per computational step.
• Overhead (Fixed Protocol Costs): These are base fees associated with operating the rollup, including sequencer fees, proof generation costs (for ZK-rollups), and any additional consensus mechanisms required to validate state transitions. Overhead costs do not fluctuate significantly based on transaction volume but are necessary for maintaining the network.
• Calldata (L1 Posting Costs): This cost is associated with submitting transaction data to the Ethereum mainnet for verification and security purposes. Calldata is stored permanently on Ethereum and directly impacts rollup costs. It is one of the most expensive components of running a rollup without EIP-4844 optimizations, as Ethereum gas fees apply to all posted calldata.

Ecosystem Analysis

Usage

Fuel Ignition saw a steady trend in daily transactions, averaging around 113,366 per day. Daily transactions decreased by 21.9% from 144,975 in Q4 2024 to 113,366 in Q1 2025, mainly due to the larger spikes in the previous quarter.

There are approximately 70 decentralized applications live on Fuel Network, with more applications in development.

Fuel Ignition’s TVL decreased from $310.9 million in Q4 2024 to $64.9 million in Q1 205, marking a decline of 79.1% QoQ as the network usage normalized post-TGE hype.

DeFi

Fuel Ignition’s main DeFi applications are Swaylend, Mira Protocol, and Fluid Protocol, which account for 97.1% of DeFi TVL. In terms of market share, Mira Protocol had the most impactful increase, moving from 19.1% market share in Q4 2024 to 56% market share in Q1 2025, a 198% QoQ increase. The largest decrease in market share was Fluid Protocol, which dropped from 9.9% in Q4 to 4.3% in Q1, a 57% QoQ decrease.

Swaylend is the leading lending protocol on Fuel Ignition, offering yield and SwayPoints on FUEL, USDC, wETH, and other ETH derivatives. Mira Protocol is the leading DEX on Fuel Ignition, allowing users to swap between tokens while also earning FUEL. Fluid Protocol offers a native decentralized stablecoin on Fuel Ignition (i.e., USDF), which, as of March 31, 2025, has 210,900 tokens in circulation.

DEX

Mira Protocol is the top DEX on Fuel Ignition, with over 99% of the market share. Since the launch of Fuel Ignition, Mira has facilitated over $164.5 million in volume. The significant spike in DEX volume can be attributed to the launch of FUEL on Dec. 19, 2024. In Q1 2025, the daily average DEX volume was $745,173, down 45.5% QoQ from $1.4 million in Q4 2024.

Decentralized Sequencer

Fuel Network has announced the implementation of a decentralized sequencer developed in collaboration with Simply Staking, a Web3 infrastructure firm. This development aims to enhance the network's resilience against attacks and censorship. It addresses critical issues such as regulatory compliance by removing central authorities from transaction ordering, minimizing trust in single entities for operations, democratizing Miner Extractable Value (MEV) with a planned auction system benefiting FUEL tokenholders, and ensuring censorship resistance.

By distributing the responsibility of transaction ordering across multiple validators, Fuel Network eliminates the single point of failure prevalent in most rollups today and increases the system's overall trustlessness. This fundamentally shifts away from the centralized sequencer model that contradicts blockchain's promise of permissionless infrastructure.

The decentralized sequencer is built using the Cosmos SDK and incorporates both standard and custom-built modules, specifically the Bridge and Sequencing modules. This architecture supports both native user transactions and Ethereum-originated operations while maintaining consistent six-second block times.

Fuel’s design prioritizes accessibility for node operators, with modest hardware requirements of 4 CPU cores, 8GB RAM, and 200 GB of disk space. This intentionally low barrier to entry aims to encourage a diverse and truly decentralized validator set.

The platform's architecture is designed to pave the way for shared sequencing infrastructure capable of supporting multiple rollups without compromising strong security guarantees. This has the potential to significantly reduce operational overhead for new rollups while maintaining trustless properties.

Other notable ecosystem events in Q1 2025 included:

• KaitoAI launched the Fuel Network Yapper Leaderboard in January 2025 to track and showcase the most influential community members within the Fuel Network ecosystem.
• On Jan. 3, 2025, Fuel introduced App Specific Sequencing and a bonding demo to eliminate transaction fees by optimizing how individual applications process transactions, reducing computational load and costs.
• On Jan. 15, 2025, the FS-1 dApp Program was unveiled, a strategic initiative designed to catalyze the growth of its ecosystem through the promotion of decentralized applications. This program, structured in seasons, starts with a diverse lineup of six projects: Mira Protocol, Sway Lend, Griffy Community, Ruscet Fi, Fluid Protocol, and Sprk Fi. Season 1 wrapped up on March 3, 2025.
• On Feb. 18, 2025, Fuel announced the incorporation of zero-knowledge proofs for settlement. This enhances security and privacy by enabling transaction verification without exposing sensitive data, advancing scalability and confidentiality.
• Ankr, a blockchain infrastructure provider, has integrated Fuel Ignition, a high-performance Ethereum Layer-2 solution, into its RPC services. This integration offers developers instant access to powerful RPCs, enabling them to build and scale projects more efficiently on Fuel's innovative platform.
• Fuel is partnered with OnlyDust for ODHack, an open-source competition in which developers can contribute to Fuel’s ecosystem. Top contributors across ODHack 12 and 13 have the potential to receive up to $15,000 in grants.

FUEL Tokenomics

FUEL has a total token supply of 10 billion, with an annual inflation rate of 3%. Users that claimed Phase 1 of the FUEL airdrop and/or bought on the open market post-TGE can stake their tokens on Fuel Network. The FUEL token has three primary use cases: (i) securing the network, (ii) paying for onchain resources, and (iii) application-specific sequencing.

The second Genesis Drop will give 150 million FUEL (1.5% of the total token supply) to more than 250,000 unique addresses.

Of the 10 billion tokens, approximately 51% will be allocated to the community through airdrops, ecosystem support, and R&D efforts.

Token supply curves help determine when an increase in sell pressure may occur. More specifically, they show when tokens unlock and to whom.

Token unlocks for the “Community” and “Ecosystem and R&D” allocations vested immediately, while unlocks for “Ecosystem and R&D 24,” “Contributors 24,” and “Purchasers” follow a 24-month linear release, and “Contributors 48” follows a 48-month linear release. The project team and purchasers, who fall into the 24-month linear vesting schedule, cannot stake locked tokens.

Roadmap

The project team plans to continue improving Fuel Ignition while also building out two additional products: Fuel [REDACTED] and Fuel Sequencer.

Fuel Ignition’s roadmap aims to land the rollup in Stage 2.

Fuel Sequencer will progress through three phases of development.

Closing Summary

In Q1 2025, Fuel demonstrated significant progress in ecosystem expansion and network adoption following the launch of Fuel Ignition and the TGE of FUEL. With Q1 being a rough quarter for most projects, FUEL was not immune to a decrease in most metrics. Despite this, the FUEL team continued to develop and ship products. The growth of DeFi protocols like Swaylend, Mira Protocol, and Fluid Protocol highlights the network’s growing adoption and diversity of product offerings.

With Q1 over, the project team is focused on continuing the development of Fuel Ignition, Fuel [REDACTED], and Fuel’s decentralized sequencer. Fuel is building a solid foundation for long-term growth and adoption in the Ethereum ecosystem, focusing on scalability, low fees, and innovative blockchain infrastructure.

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