Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin was launched on September 9, 2024, and may represent a new innovation point between the Eastern and Western cryptocurrency markets. Although Fractal has occupied a significant 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 unveil this innovative project that has rapidly gained 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 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, solidifying Fractal's role as a potential testing ground for Bitcoin upgrades and innovations.

3. A strong user base from day one: By partnering with major wallets, Fractal successfully attracted the most active Bitcoin users from the very beginning. This early adoption helped Fractal avoid the common "cold start" problem faced by new platforms.

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 current Bitcoin trends.

1. Introduction

Fractal Bitcoin is the only Bitcoin scaling solution that recursively extends 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 background 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 another method of scaling. From 2018 onwards, increasing attention has shifted to second-layer solutions such as the Lightning Network ( Lightning Network ). In this ongoing exploration of Bitcoin's scalability and functional enhancement, Fractal has emerged as a new approach, offering a unique perspective on addressing these long-standing challenges.

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

The recent launch has achieved significant success, demonstrating the project's strong appeal and technical robustness. 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 this data, Fractal's free mining hash rate 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 like 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 growing 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 method achieves functional enhancements without compromising Bitcoin's core security model, 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. 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 mined without permission, while the other is mined in conjunction with Bitcoin. This innovative mechanism encourages decentralization by allowing individual miners to freely participate in two-thirds of block production. At the same time, it enhances security by utilizing Bitcoin's powerful hash rate through joint mining on 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 improvement. 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 offer 400 times the capacity. This exponential scalability model allows Fractal to address Bitcoin's throughput limitations 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, combined with other opcodes, allows for 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 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 take advantage of 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.

2.3 Unique User Experience

Unlike other Bitcoin Layer 2 solutions, the wallet address on Fractal is identical to the mainnet address. This design provides Ethereum-like convenience, allowing users to switch networks in their 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 addresses for Layer 2 activities. As of now, major wallets fully support Fractal Bitcoin.

3. The Role 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 "Frankenstein monsters." In contrast, Fractal adopts a Bitcoin-native approach aimed at expanding Bitcoin's capabilities without introducing external architecture. 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, aimed at improving 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 BCH fork 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 rather embraces Bitcoin as the main network and seeks to scale it locally. Fractal's architecture allows for the creation of multiple instances to scale together, potentially offering unlimited scalability without compromising the security or decentralization of the underlying layer.

• Lightning Network (: The Lightning Network excels in fast, low-cost payments and high privacy, but it has limited smart contract functionality and 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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) 3.2 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 market approaches and a strong built-in user base. Supported by major wallets, this allows Fractal to reach an audience that is already actively engaged.

Many users have already held assets such as BRC20 tokens and Runes in their wallets. These users naturally hope for a cheaper, faster, and more feature-rich trading environment. Fractal is just 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 obstacles of early adoption.

In addition, Fractal's strategy regarding 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 the number of transactions 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 appealing 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.

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4. Ecosystem Construction

Fractal's ecosystem development strategy is dedicated to decentralized and community-driven growth. This section outlines the strategies Fractal employs to build a strong and diverse ecosystem.

) 4.1 Decentralization Concept

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

• Diverse cross-chain bridge solutions: different from relying on a single official bridge of certain Layers.