Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin was launched on September 9, 2024, representing an innovative direction for Bitcoin scaling solutions. Despite capturing a significant portion of Bitcoin's hash power within days of its launch, Fractal remains relatively unknown to many members of the global crypto community. This study aims to unveil 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 for PoW, proving that even as the industry shifts towards PoS, PoW remains a robust method for network security.

2. Bitcoin's precursor network: Due to its compatibility with the Bitcoin mainnet, Fractal provides developers with a real 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 partnering with a certain trading platform and a certain wallet, 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 often 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 places Fractal ahead of the current Bitcoin trends.

1. Introduction

Fractal Bitcoin is the only Bitcoin scaling solution that recursively expands infinitely 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 background of the Bitcoin scaling discussion. In 2017, the SegWit soft fork aimed to increase the block capacity of Bitcoin, followed by the controversial Bitcoin Cash hard fork as another method of expansion. From 2018 onwards, increasing attention turned to second-layer solutions, such as the Lightning Network. In this ongoing exploration of Bitcoin's scalability and functionality enhancement, Fractal emerges 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 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 data, Fractal's free mining hash rate has already surpassed three times that of Bitcoin Cash (BCH)'s total hash rate. This rapid adoption by miners shows a high level of confidence in Fractal's technology and its potential.

The project has attracted the participation of major players in the mining sector. Large mining pools such as a certain mining pool, another mining pool, and yet another mining pool have joined Fractal's mining ecosystem. Furthermore, 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, distinguishes itself from other scaling solutions through its approach. By leveraging Bitcoin's existing codebase and modifying block production parameters, Fractal maintains full compatibility with the Bitcoin mainnet, ensuring seamless integration with existing infrastructure. This approach achieves functionality enhancements without compromising Bitcoin's core security model, striking a balance between innovation and preserving the fundamental principles of Bitcoin.

) 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 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 employs a unique hybrid mining method. Out of every three blocks, two are mined without permission, while the other is jointly mined 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 of every third block. This balanced approach aims to maintain network security and decentralization, while also incentivizing existing Bitcoin miners to support the Fractal network.

• Scalability: The architecture of Fractal theoretically supports infinite layers of improvement. Each Fractal layer provides a 20-fold increase in capacity compared to the Bitcoin mainnet. This means that 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 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 facilitate 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, so 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. Additionally, users can use the same address between the Bitcoin mainnet and Fractal, simplifying the user experience and reducing the risk of address management errors.

The founder of a certain wallet and a core contributor to Fractal outlined his vision while answering community questions.

2.3 Unique User Experience

Unlike other Bitcoin Layer 2 solutions, the wallet address on Fractal is exactly the same as the mainnet address. This design provides Ethereum-like convenience, allowing users to switch networks in certain wallets to access different layers. In contrast to other Bitcoin Layer 2 solutions that require separate EVM wallet addresses, Fractal allows users to continue using their Bitcoin mainnet address for Layer 2 activities. As of now, major wallets like certain wallets fully support Fractal Bitcoin, serving most active Bitcoin DeFi and collectibles users.

3. The Position of Fractal in the Bitcoin Ecosystem

Comparison with Other Bitcoin Solutions 3.1

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, particularly its core users and developers, often views these EVM-compatible solutions as "Frankensteins." In contrast, Fractal takes a Bitcoin-native approach, aiming to expand Bitcoin's capabilities without introducing external architectures. This approach may align better with the ideals of Bitcoin purists and may achieve 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 divide 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 instead embraces Bitcoin as the mainnet and seeks to scale it locally. Fractal's architecture allows for the creation of multiple instances to scale together, potentially providing unlimited 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.

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3.2 Market Strategy and Built-in User Base

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

Many users of a certain wallet already hold assets like BRC20 tokens and Runes in their wallets. These users naturally wish for a cheaper, faster, and more feature-rich trading environment. Fractal is precisely able to meet this demand directly, 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, that is, the challenge of attracting an initial user base from scratch and establishing network effects. By leveraging the existing user base of a certain wallet, Fractal may bypass 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 regard Total Value Locked ( 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 naturally generate a large number of transactions as these users interact with existing assets on a more efficient platform.

By focusing on trading volume rather than TVL, Fractal is able to demonstrate real usage and adoption, which may be more attractive to users and investors in the long run. This strategy also allows Fractal to stand out among many projects that focus on TVL figures as their competitive focal point.

4. Ecosystem Construction

Fractal's ecosystem development strategy is committed to decentralization and community-driven growth. This section outlines the strategies Fractal employs to build a robust and diverse ecosystem.

( 4.1 Decentralization Concept

The core of building a Fractal ecosystem is a firm commitment to decentralization. This concept is reflected in several key aspects:

• Diversified cross-chain bridges