Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin was launched on September 9, 2024, and may represent a significant innovation in the Bitcoin ecosystem. Although Fractal has captured a substantial portion of Bitcoin's hash power within a few days of its launch, it remains relatively unfamiliar to many in the global crypto community. This study aims to reveal this innovative project that has quickly 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 method.

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, reinforcing Fractal's role as a potential upgrade and innovation testing ground for Bitcoin.

3. A strong user base from day one: By partnering with certain trading platforms and wallets, 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 positions Fractal at the forefront of current Bitcoin trends.

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 Segregated Witness ( SegWit ) soft fork aimed to increase the block capacity of Bitcoin, followed by the controversial Bitcoin Cash ( Bitcoin Cash ) hard fork as an alternative scaling method. From 2018 onwards, increasing attention turned to second-layer solutions like the Lightning Network ( Lightning Network ). In this ongoing exploration of Bitcoin's scalability and functional enhancement, Fractal emerged as a new approach, offering a unique perspective to address 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 project's strong appeal and technological robustness. Within just 24 hours of the mainnet launch, Fractal's joint mining accounted for over 40% of Bitcoin's total hash power, while free mining on Fractal represented 2% of Bitcoin's hash power. To better understand these figures, Fractal's free mining hash power has surpassed three times the total hash power 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 the participation of major players in the mining sector. Large mining pools such as F2Pool, Antpool, and Spiderpool have joined Fractal's 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.

Core Concepts and Technologies

Native Bitcoin Expansion

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 the fundamental principles of Bitcoin.

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 employs 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 two-thirds of the block production. At the same time, it enhances security by utilizing Bitcoin's powerful hashing 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 improvements. Each Fractal layer offers a 20-fold increase in capacity 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 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 the Bitcoin platform. OP_CAT is a simple concatenation operation that, 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, 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 leverage 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.

Unique user experience

Unlike other Bitcoin Layer 2 solutions, wallet addresses on Fractal are exactly the same as the mainnet addresses. This design provides the convenience similar to Ethereum, allowing users to switch networks in certain 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 in Layer 2 activities. As of now, certain major wallets serving most active Bitcoin DeFi and collectibles users fully support Fractal Bitcoin.

The Position of Fractal in the Bitcoin Ecosystem

Comparison of ### 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 attempt 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" creations. In contrast, Fractal takes a Bitcoin-native approach aimed at expanding Bitcoin's capabilities without introducing external architectures. This approach may align better with the ideals of Bitcoin purists and could lead to 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 divisions 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 took a fundamentally different approach. It did not create a separate chain or force users to make a choice, but instead embraced Bitcoin as the mainnet and sought to scale it locally. Fractal's architecture 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 without the need for channel management, providing a simpler user experience.

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) Market Strategy 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 marketing approaches and a strong built-in user base. Supported by certain wallets, which have about 1 million weekly active users, this allows Fractal to reach an already engaged audience.

Many of these users already hold assets like BRC20 tokens and Runes in their wallets. Naturally, these users want a cheaper, faster, and feature-rich trading environment. Fractal is able to directly meet this demand, 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 and building network effects from scratch. By leveraging the existing user base, 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 generate a significant amount of transactions naturally as they interact with existing assets on a more efficient platform.

By focusing on trading volume rather than TVL, Fractal can showcase 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 numerous projects that focus on TVL figures as their competitive highlight.

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Ecosystem Construction

Fractal's ecosystem development strategy is dedicated to decentralized and community-driven growth. This section outlines Fractal's strategies for building a robust and diverse ecosystem.

) decentralized concept

The core of the Fractal ecosystem construction is a strong commitment to decentralization. This concept is reflected in several key aspects:

• Diverse cross-chain bridge solutions: Unlike some Layer 2 solutions that rely on a single official bridge, Fractal encourages the use of multiple cross-chain bridging methods between the mainnet and its network. This approach reduces the risk of single points of failure and promotes innovation in cross-chain interactions.

• Open Development Environment: Fractal does not impose specific development frameworks or methods, allowing developers to innovate freely within the ecosystem.

• Community-driven governance: The direction of the ecosystem is primarily determined by community input and initiatives, rather than being unilaterally decided by a central authority.