Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin was launched on September 9, 2024, and may represent a new innovation point in the Bitcoin market. Although Fractal has captured a significant portion of Bitcoin's computing power within just a few days of its launch, it remains relatively unknown to many in the global crypto community. This study aims to reveal this innovative project that has rapidly gained attention in 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 for PoW, proving that even as the industry shifts towards PoS, PoW remains a robust network security approach.

2. Bitcoin's leading network: Due to its compatibility with the Bitcoin mainnet, Fractal provides developers with a realistic testing environment, offering 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 upgrade and innovation testing ground for Bitcoin.

3. A strong user base from day one: By collaborating 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" problem 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 successfully integrates key participants in the Bitcoin ecosystem, including the BRC-20, Ordinals, and Runes communities, which positions 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 grasp 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 an alternative scaling method. From 2018 onward, increasing attention turned to second-layer solutions such as the Lightning Network. In this ongoing exploration of Bitcoin's scalability and functionality enhancement, Fractal has emerged as a new approach, offering a unique perspective to tackle these long-standing challenges.

As an important milestone, the Fractal mainnet officially launched on September 9, 2024, at 00:00 UTC.

The recent 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 accounted for 2% of Bitcoin's hash rate. To better understand these figures, Fractal's free mining hash rate has exceeded three times the total hash rate of Bitcoin Cash (BCH). This rapid adoption by miners shows 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 Scaling

Fractal, as a native extension of Bitcoin, differentiates 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 functional 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 introduces 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. Moreover, 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. In 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: Fractal's architecture theoretically supports infinite layers of improvements. Each Fractal layer provides a 20-fold capacity increase compared to the Bitcoin mainnet. This means the base layer offers 20 times the capacity of Bitcoin, while the second layer will provide 400 times the capacity. This exponential scalability model allows Fractal to address Bitcoin's throughput limitations while maintaining the security attributes 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, enables complex smart contract logic. This functionality opens up possibilities for advanced DeFi protocols, intricate 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, ensuring that specific optimizations do 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 utilize independently tuned layers 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. In addition, users can use the same address between the Bitcoin mainnet and Fractal, simplifying the user experience and reducing the risk of address management errors.

2.3 Unique User Experience

Unlike other Bitcoin Layer 2 solutions, the wallet addresses on Fractal are exactly the same as the mainnet addresses. This design offers 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 fully support Fractal Bitcoin, serving the majority of active Bitcoin DeFi and collectibles users.

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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. Below 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 "Frankenstein". In contrast, Fractal adopts a Bitcoin-native approach aimed at extending Bitcoin's capabilities without introducing external architectures. This approach may align better with the ideals of Bitcoin purists and could achieve better integration and adoption within the existing Bitcoin ecosystem.

• Bitcoin Cash ( BCH ): Bitcoin Cash emerged as a hard fork of Bitcoin, aiming to enhance scalability through larger block sizes. This approach led to divisions within the Bitcoin community and forced users to choose between two competing visions of Bitcoin. The fork of BCH sparked numerous political debates, often overshadowing the technical discussions. In contrast, Fractal takes a fundamentally different approach. It does not create an independent chain or force users to make a choice, but instead embraces Bitcoin as the mainnet and seeks to scale it locally. The architecture of Fractal allows for the creation of multiple instances that can scale together, potentially providing limitless 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 functionality is 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 Strategies and Built-in User Base

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

Many UniSat users already hold assets such as BRC20 tokens and Runes in their wallets. These users naturally wish for a cheaper, faster, and feature-rich trading environment. Fractal just happens to 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 built-in 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 and establishing network effects from scratch. By leveraging UniSat's existing user base, Fractal may bypass the hurdles of early adoption.

In addition, Fractal's strategy on growth metrics also distinguishes it from many other blockchain projects. While many Layer 2 solutions and new blockchains consider Total Value Locked ( TVL ) as a core metric, Fractal plans to use the number of transactions as its North Star metric. This strategy aligns with its existing user base, which is likely to naturally generate a large number of transactions when interacting 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 many projects that focus on TVL numbers as their competitive highlight.

4. Ecosystem Construction

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