Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin will be launched on September 9, 2024, and may represent a significant breakthrough in Bitcoin scaling solutions. Although it has already captured a considerable portion of Bitcoin's hash power within days of its launch, Fractal remains relatively unknown to many in the global crypto community. This study aims to reveal this innovative project that is rapidly gaining attention within the Bitcoin ecosystem.

Key Points

1. Innovative Mining Method: Fractal introduces a hybrid mining model that combines merged mining and permissionless mining. This model provides a new perspective on PoW, proving that even as the industry leans towards PoS, PoW remains a robust network security method.

2. Bitcoin's Pilot Network: Due to its compatibility with the Bitcoin mainnet, Fractal offers developers a realistic testing environment, providing valuable user data and activity insights. The activation of OP_CAT on Fractal marks the beginning of numerous anticipated experiments, solidifying Fractal's role as a potential testing ground for Bitcoin upgrades and innovations.

3. Strong user base from day one: By partnering with OKX and UniSat, Fractal successfully attracted the most active Bitcoin users from the very beginning. This early adoption helped Fractal avoid the common "cold start" problems that new platforms face.

4. Grassroots and Community-Oriented: Fractal maintains a pragmatic community-driven strategy, avoiding excessive hype and institutional influence. This focus on organic growth and participation is at its core.

5. Ecosystem Integration: Fractal has successfully integrated key participants in the Bitcoin ecosystem, including the BRC-20, Ordinals, and Runes communities, which puts Fractal ahead of the current Bitcoin trends.

1. Introduction

Fractal Bitcoin is the only Bitcoin scaling solution that recursively expands infinite levels using the Bitcoin core code itself, built on the world's most secure and widely held blockchain.

To fully understand the innovation of Fractal, it is necessary to understand the historical context of the Bitcoin scaling debate. In 2017, the SegWit soft fork aimed at increasing Bitcoin's block capacity, followed by the controversial Bitcoin Cash hard fork as another scaling method. From 2018 onwards, more attention turned to second-layer solutions such as the Lightning Network. In this ongoing exploration of Bitcoin's scalability and functional enhancement, Fractal emerges as a new approach, offering a unique perspective on addressing these long-standing challenges.

As an important milestone, Fractal's mainnet will officially launch on September 9, 2024, at 00:00 UTC.

The launch has achieved significant success, demonstrating the strong appeal and technical robustness of the project. Within just 24 hours of the mainnet launch, Fractal's joint mining accounted for over 40% of Bitcoin's total hash rate, while free mining on Fractal contributed 2% of Bitcoin's hash rate. To better understand this data, the free mining hash rate on Fractal has surpassed three times the total hash rate of Bitcoin Cash (BCH). This rapid adoption by miners indicates a high level of confidence in Fractal's technology and its potential.

The project has attracted participation from major players in the mining sector. Large mining pools such as F2Pool, Antpool, and Spiderpool have already joined the Fractal mining ecosystem. Additionally, several other well-known mining pools are preparing to participate, indicating that interest in the Fractal mining network is increasing and has the potential for further expansion.

2. Core Concepts and Technologies

( 2.1 Native Bitcoin Expansion

Fractal, as a native extension of Bitcoin, distinguishes itself from other scaling solutions through its approach. By leveraging Bitcoin's existing codebase and modifying block production parameters, Fractal maintains complete compatibility with the Bitcoin mainnet, ensuring seamless integration with existing infrastructure. This approach achieves functionality enhancements without compromising the core security model of Bitcoin, striking a balance between innovation and upholding Bitcoin's fundamental principles.

) 2.2 Technical Specifications

Fractal has introduced several key technological innovations:

• Block Time: Fractal has achieved a block time of 30 seconds, which is a significant improvement compared to Bitcoin's 10-minute block time. This faster block time allows for quicker transaction confirmations, greatly enhancing the user experience. Additionally, it significantly increases the overall throughput of the network, potentially supporting a wider range of complex applications that require high transaction volumes.

• Mining Mechanism: Fractal adopts a unique hybrid mining method. Out of every three blocks, two are permissionless mining while the other is joint mining with Bitcoin. This innovative mechanism encourages decentralization by allowing individual miners to freely participate in the production of two-thirds of the blocks. At the same time, it enhances security by utilizing Bitcoin's powerful computing power through joint mining every third block. This balanced approach aims to maintain network security and decentralization while incentivizing existing Bitcoin miners to support the Fractal network.

• Scalability: The architecture of Fractal theoretically supports infinite layers of improvement. Each Fractal layer offers a 20-fold capacity increase compared to the Bitcoin mainnet. This means the base layer provides 20 times the capacity of Bitcoin, while the second layer will provide 400 times the capacity. This exponential scalability model allows Fractal to address the throughput limitations of Bitcoin while maintaining the security properties of the base layer.

• Smart Contract Functionality: By implementing the OP_CAT opcode, Fractal has achieved Turing-complete smart contracts on a Bitcoin-based platform. OP_CAT is a simple concatenation operation that, when combined with other opcodes, can realize complex smart contract logic. This functionality opens up possibilities for advanced DeFi protocols, complex NFT mechanisms, and other decentralized applications that were previously limited to the Ethereum platform.

• Parallel Execution: The architecture of Fractal allows different applications to run their own instances, enabling specific optimizations to not affect the entire network. For example, gaming platforms can operate on a specially optimized Fractal layer for high-frequency, low-value transactions, while DeFi protocols can leverage an independently tuned layer for financial operations.

• Compatibility: Fractal maintains 100% compatibility with Bitcoin standards ( such as BRC-20 and Ordinals ). This ensures that existing Bitcoin tokens and NFTs can operate seamlessly. Furthermore, users can use the same address between the Bitcoin mainnet and Fractal, simplifying the user experience and reducing the risk of errors in address management.

2.3 Unique User Experience

Unlike other Bitcoin Layer 2 solutions, wallet addresses on Fractal are identical to mainnet addresses. This design provides Ethereum-like convenience, allowing users to switch networks in UniSat or OKX wallets to access different layers. Unlike other Bitcoin Layer 2 solutions that require separate EVM wallet addresses, Fractal allows users to continue using their Bitcoin mainnet addresses for Layer 2 activities. As of now, major wallets like OKX wallet and UniSat wallet, which serve the majority of active Bitcoin DeFi and collectibles users, fully support Fractal Bitcoin.

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3. The Position of Fractal in the Bitcoin Ecosystem

) Comparison of 3.1 with Other Bitcoin Solutions

Fractal has entered a highly competitive market for Bitcoin scaling solutions. Here is a comparison with some major alternatives:

• EVM-Compatible Layer 2: Some projects are attempting to create EVM-based second-layer solutions for Bitcoin. While these solutions are relatively easy to implement and launch, they face significant challenges in terms of acceptance within the Bitcoin community. The Bitcoin ecosystem, especially its core users and developers, often views these EVM-compatible solutions as "Frankensteins." In contrast, Fractal adopts a Bitcoin-native approach aimed at expanding Bitcoin's capabilities without introducing external architectures. This approach may resonate better with Bitcoin purists' ideals and could facilitate better integration and adoption within the existing Bitcoin ecosystem.

• Bitcoin Cash ( BCH ): Bitcoin Cash emerged as a hard fork of Bitcoin, aiming to improve scalability through larger block sizes. This approach led to a split within the Bitcoin community and forced users to choose between two competing visions of Bitcoin. The fork of BCH sparked many political debates, often overshadowing the technical discussions. In contrast, Fractal takes a fundamentally different approach. It does not create a separate chain or force users to make a choice, but embraces Bitcoin as the mainnet and seeks to scale it locally. The architecture of Fractal allows for the creation of multiple instances to scale together, potentially providing infinite scalability without sacrificing the security or decentralization of the underlying layer.

• Lightning Network ###: The Lightning Network excels in fast, low-cost payments and high privacy, but its smart contract capabilities are limited and it faces channel liquidity issues. In contrast, Fractal offers comprehensive smart contract support, does not require channel management, and provides a simpler user experience.

3.2 Market Strategy and Built-in User Base

Fractal stands out in the highly competitive Layer 2 space, not only relying on technological innovation but also gaining an advantage through strategic market approaches and a strong built-in user base. With the support of UniSat, which is a leading Bitcoin wallet with approximately 1 million weekly active users, Fractal is able to reach an already actively engaged audience.

Many UniSat users already hold assets such as BRC20 tokens and Runes in their wallets. These users naturally desire a cheaper, faster, and more feature-rich trading environment. Fractal can directly meet this demand by providing an improved trading experience while maintaining familiarity and compatibility with the Bitcoin ecosystem that these users are accustomed to.

This inherent user base gives Fractal a significant advantage over other Layer 2 solutions and new blockchain platforms, which often face the "cold start" problem of attracting an initial user base from scratch and establishing network effects. By leveraging UniSat's existing user base, Fractal may circumvent the barriers to early adoption.

In addition, Fractal's strategy on growth metrics also sets it apart from many other blockchain projects. While many Layer 2 solutions and new blockchains consider Total Locked Value ( TVL ) as a core metric, Fractal plans to use transaction volume as its North Star metric. This strategy aligns with its built-in user base, which is likely to generate a large number of transactions naturally as these users interact with existing assets on a more efficient platform.

By focusing on trading volume rather than TVL, Fractal is able to showcase real usage and adoption, which may be more appealing to users and investors in the long run. This strategy also allows Fractal to stand out among numerous projects that focus on TVL numbers as their competitive edge.

4. Ecosystem Construction

Fractal's ecosystem development strategy is committed to decentralized and community-driven growth. This section outlines Fractal's efforts to build a strong and diverse ecosystem.