Fractal Bitcoin ( Fractal ): A new attempt at Bitcoin scaling

Since September, with the community discussions sparked by Fractal, market attention has returned to the entire Bitcoin ecosystem. A large number of users have participated in the assets and gameplay launched by Fractal, leading to persistently high on-chain gas fees. The reason Fractal has generated such significant interest is primarily related to the current overall market slump and the lack of fresh narratives. Additionally, based on the generous airdrop actions of a certain wallet previously, many users have clearly placed great importance on the launch of Fractal, resulting in extreme competition during the testnet phase, with rough estimates of over ten million addresses participating in the corresponding testnet tasks to vie for airdrop rewards. Finally, assets protocols like Cat20 have brought high multiple returns, and as the profit effect continues to ferment, Fractal's popularity is also continuously rising.

In addition, the official hunger marketing of a certain wallet has also played a role in this. Originally, the circulating supply of the airdropped FB was very small, but as competition on the entire chain intensified, the price of FB skyrocketed, becoming a kind of golden shovel in a certain sense, indirectly accelerating the development of Fractal.

Based on the above reasons, it is necessary to analyze Fractal.

Overview of Fractal: Bitcoin Scaling Native Expansion Solution

Fractal is a Bitcoin scaling solution that recursively extends infinite layers on top of the BitcoinCore code. It is designed as a second-layer network or sidechain for Bitcoin, serving as a native extension of the first-layer Bitcoin network, aiming to improve transaction efficiency by accelerating block times and increasing block capacity while maintaining orthodoxy. It is fully compatible with the Bitcoin mainnet, allowing users to conduct transactions on the Fractal network, which can then interact or synchronize with the Bitcoin mainnet. At the same time, it offers faster transaction confirmation times ( such as 30 seconds block ) and larger block capacity ( that is 20 times ) that of the Bitcoin mainnet.

As a native extension solution, Fractal can start from the Bitcoin main chain to achieve secure asset transfers across layers. Bitcoin and assets like BRC-20 and Ordinals can be bridged through a decentralized bridge. The underlying mechanism is a rotating MPC signature mechanism with dynamic replacement, while also considering the specific aspects of the BRC-20 standard.

Fractal is more like the Bitcoin testnet in functionality, supporting some features that have not yet been activated on the mainnet, serving as a testing ground to provide better user experience and performance optimization, making it very suitable for experimenting and innovating complex applications. At the same time, it allows users to get involved and provide feedback in a real interactive environment, similar to the significance of EVM Layer2 for Ethereum.

Investment and Financing: Development Power Under Strong Alliances

The Fractal network is collaboratively developed by two main teams, namely a leading Bitcoin wallet and a crypto-native fund. The wallet, which serves as the main developer and promoter, has over 900,000 active users weekly and has secured undisclosed funding five times, with two rounds led by well-known exchanges and participation from several reputable investment institutions.

The investment portfolio of this native crypto fund includes several well-known projects, and it has rich experience in dollar A9 exits and investing in 100x projects, as well as developing globally used blockchain applications. Overall, the resources of the two project parties are relatively more outstanding; they have attracted many loyal users through their successful brand architecture and previous generous airdrops, becoming the best endorsement for Fractal.

With the support of resources from both project parties, Fractal implemented a series of strategic plans to initiate user and developer participation. After the mainnet launch, 1 million FB tokens were distributed to over 100,000 eligible addresses, along with various developer resource funding programs, reflecting Fractal's ambition for ecological construction.

Fractal Highlights: Advantages Highlighted

The main highlights of Fractal lie in its performance optimization and improvements based on the Bitcoin mainnet, as well as the newly launched asset issuance methods and ecological applications. It can be vividly said that Fractal is a new wine in an old bottle, using the resources of the Bitcoin mainnet for a new asset issuance method. Specifically:

1. Highly compatible with the Bitcoin mainnet
2. Faster block time ( 30 seconds ) and larger block capacity ( Mainnet 20 times )
3. Support for cross-chain assets such as BRC-20 and Ordinals
4. Introduce the OP_CAT opcode to enhance script functionality
5. By adopting the Cadence Mining mechanism, BTC miners can seamlessly participate.
6. Launch various innovative asset protocols such as CAT20
7. Building decentralized trading, gaming, and other ecological applications

The overall design of Fractal allows assets such as Bitcoin, BRC-20, and Ordinals to cross chains through a decentralized bridge. Transaction records on the Fractal network will then interact or synchronize with the Bitcoin mainnet, while providing faster confirmation times and greater capacity compared to the mainnet.

Implementation Path: Multi-layer Expansion, Innovative Mining and OP_CAT

multi-level expansion mechanism

Fractal enhances Bitcoin transaction speed by recursively expanding layers, establishing multiple levels of expansion layers on the main chain to form a tree structure. This design allows each layer to further branch out, increasing the network's parallel processing capability. Each layer can independently handle transactions and dynamically adjust the number of layers as needed. During peak transaction times, it can quickly add levels to process more transactions, allowing the network to flexibly respond to various loads.

This is like building multiple parallel highways next to the Bitcoin mainnet. Each road can expand the mainnet or expand another road. This way, each has its unique value orientation, allowing users to solve congestion issues without needing to change their means of transportation.

Cadence Mining( Cadence Mining)

Fractal adopts the same PoW consensus mechanism as Bitcoin, which means BTC miners can seamlessly transition to Fractal block mining using existing ASICs, GPUs, and other hardware, effectively killing two birds with one stone. By sharing the workload, efficiency is improved, providing Bitcoin miners with additional economic benefits.

The mining method of Fractal is divided into permissionless and merged mining. Out of every three blocks, two are generated through permissionless mining, and one is generated through merged mining. Permissionless mining allows anyone with the appropriate tools to mine Fractal blocks, and anyone can participate in the network by running a node. Merged mining is specifically aimed at BTC miners, allowing them to mine BTC and Fractal blocks simultaneously without the need for extra computing power.

OP_CAT

OP_CAT is an opcode in the Bitcoin scripting language, originally used for concatenating two elements into a string. It was removed in 2010 for security reasons, as it could lead to excessive memory usage in scripts. The benefit of OP_CAT lies in its ability to construct more complex and trustless Bitcoin infrastructure, which is crucial for implementing advanced transaction conditions and features. Fractal's introduction of OP_CAT could bring more development possibilities to the BTC ecosystem, such as on-chain applications, smart contracts, and more.

Fractal Token Economics

The Fractal mainnet primarily consumes two tokens: $FB as general gas, and $SATS as the exclusive gas for a certain decentralized trading platform.

The total issuance of FB is 210 million coins, and only the tokens mined after the mainnet launch can circulate, while other tokens have a locking mechanism, with private placements locked for six months.

• 50% - PoW mining, Bitcoin miners can directly mine $FB
• 15% - Ecosystem Treasury, used for investing in and supporting Fractal ecosystem projects
• 15% - Core contributors, building and maintaining the Fractal core software
• 10% - Community subsidy, establish partnerships and liquidity programs
• 5% - Pre-sale, targeting early investors and network participants
• 5% - Consultant, providing strategic advice and support for the project

Currently, the official has not clearly stated whether users participating in the testnet will receive airdrop rewards. Although it is unlikely that parts such as consultants, community subsidies, and ecosystem treasury will be misappropriated by the team, 45% is still held by the official in the short term, which may pose risks.

In order to ensure complete transparency, the official allows users to subsequently track specific addresses to view fund usage.

Fractal Ecosystem Overview

CAT20 Protocol

The most popular ecological protocol of Fractal currently is CAT20, which was released on September 11, with a total supply of 21 million. Although the code and project information are unclear and may pose risks, a large number of users rushed to mint due to community sentiment and KOL promotion, leading to a spike in on-chain Gas, peaking at nearly 7000. The FB token was once speculated to a price of 40U, reflecting the level of FOMO in the entire circle towards CAT20.

The main innovation of CAT20 is the use of the OP_CAT opcode, which perfectly fits the Fractal ecosystem. Its modular and programmable minting provides flexible and composable rules for complex DeFi applications such as AMM, lending, and staking. Another feature is that transactions are fully verified by miners, reducing dependency on indexers and making the protocol harder to manipulate.

Currently, a certain wallet indicates that the CAT20 trading market is under research, and official resources support is on the way. However, the official social media account of CAT20 has been frozen, which increases uncertainty. As it is still in the initial stage, the feasibility of the protocol needs further observation.

BTCTerminal

BTCTerminal is a relatively noteworthy project that was initially an infrastructure provider for the Runes protocol, later rebranded and integrated into Fractal. It has now launched a comprehensive trading market for the Fractal ecosystem, supporting queries for Mint progress, wallet balances, and will also support the upcoming Cat721. Recently, the official team launched a mining pool activity, allowing users to rent ASIC miner computing power to participate in $FB mining, with a total limit of $50,000; specific risks and returns need to be considered comprehensively.

UniWorlds

UniWorlds is a metaverse project built on Fractal, developing a community and game toolkit for interoperable virtual worlds, and will launch a BTC ecological game creation platform. It is also the first large-scale application developed by a certain wallet team on Fractal. On August 8, it was announced that the seed round investment was completed with joint lead investment from the wallet and UGC platform manufacturers. As a project that has clearly received official resource support, it is worth further attention to its development.

BRC20

The BRC20 function was activated at block 21000, and the on-chain gas has remained high for a long time, attracting some attention. However, in terms of trading volume and market capitalization, the performance of top inscription projects has not been ideal, with a common occurrence of entrepreneurial funds or studios monopolizing the market. Whether any projects can stand out in the future still needs to be tested by the market.

Considerations for Participants: Different Perspectives of Retail Investors, Miners, and VCs

Retail Investor Perspective

The new asset protocol and high popularity brought by Fractal have attracted some on-chain retail investors. With the mindset of "better to lose money than to miss out," they actively participate in the minting and speculation of new assets. Community power is the main driving force. With 50% of the time cost in POW output, retail investors may hold a significant amount of chips in the short term, and this may be the best time to profit.

Miner's Perspective

Bitcoin miners can mine BTC and FB simultaneously. If the Fractal ecosystem continues to improve and use cases for consuming FB emerge continuously, when consumption exceeds output, miners can drive up the price of FB for profit. Conversely, if the ecosystem stagnates, the value of FB will decrease over time. In the future, if it gets listed on an exchange, when the value of FB is fully realized, it may