Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin was launched on September 9, 2024, and may represent an innovation point in the Bitcoin market. Although Fractal has taken up a considerable portion of Bitcoin's computing power in the days following its launch, it remains relatively unknown to many in the global crypto community. This study aims to reveal this innovative project that is rapidly gaining 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 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 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 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 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, positioning Fractal ahead of the 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 context of the Bitcoin scalability discussions. 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. Starting in 2018, more and more attention shifted to second-layer solutions like the Lightning Network ( 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 address 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, showcasing 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 power, while Fractal's free mining constituted 2% of Bitcoin's hash power. To better understand this data, Fractal's free mining hash power has exceeded three times that of Bitcoin Cash (BCH)'s total hash power. This rapid adoption by miners demonstrates 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 certain platforms, have already joined Fractal's mining ecosystem. In addition, 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 Expansion

Fractal, as the 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 Bitcoin's core security model, striking a balance between innovation and upholding Bitcoin's fundamental principles.

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 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 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 block production. At the same time, it enhances security by utilizing Bitcoin's powerful computing power through joint mining for 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 improvement. Each Fractal layer offers a 20-fold capacity increase 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 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, allows for complex smart contract logic. This feature 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 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 like BRC-20 and Ordinals(. This ensures that existing Bitcoin tokens and NFTs can run 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, wallet addresses on Fractal are identical to mainnet addresses. 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 addresses for Layer 2 activities. As of now, several major wallets that serve most active Bitcoin DeFi and collectible users fully support Fractal Bitcoin.

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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. Here 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". In contrast, Fractal takes a Bitcoin-native approach aimed at extending Bitcoin's capabilities without introducing external architecture. This approach may align better with the ideals of Bitcoin purists and could facilitate 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 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 locally scale it. Fractal's architecture allows for the creation of multiple instances that can scale together, potentially providing infinite scalability without compromising the security or decentralization of the base layer.

• 闪电网络)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.

) 3.2 Market Strategy and Built-in User Base

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

Many users of this wallet already hold assets such as BRC20 tokens and Runes in their wallets. These users naturally want a cheaper, faster, and feature-rich trading environment. Fractal is perfectly positioned 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 built-in user base gives Fractal a significant advantage over other Layer 2 solutions and new blockchain platforms, which typically face the "cold start" problem, that is, the challenge of attracting an initial user base and establishing network effects from scratch. By leveraging the existing user base, Fractal may bypass the hurdles of 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 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 could 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 highlight.

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4. Ecosystem Construction

Fractal's ecosystem development strategy is committed to decentralized and community-driven growth. This section outlines Fractal's strategies for building 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: 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 fosters innovation in cross-chain interaction.

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

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

• Distributed base