Fractal Bitcoin: Comprehensive Research Report

Abstract

Fractal Bitcoin was launched on September 9, 2024, representing an innovation in the Bitcoin expansion space. Although it has captured a considerable share of Bitcoin's hashing power within a few days of its launch, it remains relatively unknown in the global crypto community. This study aims to uncover this rapidly emerging innovative project within the Bitcoin ecosystem.

Key Points

1. Innovative mining method: Fractal introduces a hybrid mining model that combines merged mining and free mining. This model provides a new perspective on PoW, proving that even as the industry tilts 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 its role as a potential upgrade and innovation testing ground for Bitcoin.

3. Strong initial user base: By partnering with major wallets, Fractal attracted Bitcoin's most active users right from the start. 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 has successfully integrated key participants in the Bitcoin ecosystem, including the BRC-20, Ordinals, and Runes communities, positioning it 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 essential to grasp the historical context of the Bitcoin scalability debate. In 2017, the segregated witness ( SegWit ) soft fork aimed to increase Bitcoin's block capacity, which was followed by the controversial Bitcoin Cash ( hard fork. From 2018 onward, increasing attention turned to second-layer solutions, such as the 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.

The Fractal mainnet will officially launch on September 9, 2024, at 00:00 UTC.

The launch has achieved remarkable 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 these figures, Fractal's free mining hash rate has exceeded three times the total hash rate of Bitcoin Cash (BCH). 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 F2Pool, a certain mining pool, and another mining pool have 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 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 the core security model of Bitcoin, striking a balance between innovation and upholding Bitcoin's fundamental principles.

) 2.2 Technical Specifications

Fractal introduces several key technological innovations:

• Block Time: Fractal achieves 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. Out of every three blocks, two are freely mined, 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 the block production. At the same time, it enhances security by leveraging Bitcoin's powerful hashing power through every third block that is mined jointly. 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 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 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 the Bitcoin-based platform. OP_CAT is a simple concatenation operation that, when combined with other opcodes, can implement 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 leverage a parameter-tuned independent layer 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.

Lorenzo, 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 identical to the mainnet address. This design offers Ethereum-like convenience, 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 enables users to continue using their Bitcoin mainnet addresses in Layer 2 activities. As of now, major wallets like certain wallets fully support Fractal Bitcoin, catering to most active Bitcoin DeFi and collectibles users.

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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 Bitcoin scaling solution market. 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-like". 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 result in 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 schism within the Bitcoin community, forcing users to choose between two competing visions of Bitcoin. The fork of BCH sparked numerous political debates, often overshadowing the technical discussions. In contrast, Fractal takes a fundamentally different approach. It does not create an independent chain or force users to make a choice, but instead embraces Bitcoin as the mainnet and seeks to natively scale it. Fractal's architecture allows for the creation of multiple instances to scale together, potentially offering 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 functionality is 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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) 3.2 Market Strategy and Built-in User Base

Fractal stands out in the highly competitive Layer 2 space, not only relying on technological innovation but also gaining an advantage through strategic marketing 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 enables Fractal to reach an already actively engaged audience.

Many users of certain wallets already hold assets such as BRC20 tokens and Runes in their wallets. These users naturally wish for a cheaper, faster, and more feature-rich trading environment. Fractal is perfectly positioned 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 built-in 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 certain wallets, Fractal may bypass the barriers to early adoption.

In addition, Fractal's strategy on growth metrics also distinguishes it from many other blockchain projects. While many Layer 2 solutions and new blockchains consider Total Value Locked ( 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 significant 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 focus.

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4. Ecosystem Construction

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

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