Fractal Bitcoin: Comprehensive Research Report

Abstract

Fractal Bitcoin was launched on September 9, 2024, and may become an important innovative project between the Eastern and Western cryptocurrency markets. Although Fractal has quickly captured a significant portion of Bitcoin's computing power shortly after its launch, it remains relatively unknown in the global crypto community. This study aims to analyze in depth this rapidly rising innovative project in the Bitcoin ecosystem.

Key Points

1. Innovative mining method: Fractal introduces a hybrid mining model that combines joint mining and free mining. This model provides a new perspective on proof of work, demonstrating that even as the industry shifts towards proof of stake, proof of work remains a robust network security method.

2. Bitcoin's pioneering 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 many anticipated experiments, solidifying its role as a potential upgrade and innovation testing ground for Bitcoin.

3. A strong initial user base: By collaborating with certain 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. 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 uses the Bitcoin core code itself to recursively expand infinite layers, 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 scalability discussion. In 2017, the Segregated Witness soft fork aimed to increase the Bitcoin block capacity, followed by the controversial Bitcoin Cash hard fork as another method of expansion. Starting in 2018, more and more attention turned to second-layer solutions, such as the Lightning Network. In this ongoing exploration of Bitcoin's scalability and functional enhancement, Fractal stands out as a new approach, offering a unique perspective to address these long-term challenges.

Fractal's mainnet officially launched on September 9, 2024, at 00:00 UTC, achieving significant success. Within just 24 hours, Fractal's joint mining accounted for over 40% of Bitcoin's total hash rate, while free mining accounted for 2% of Bitcoin's hash rate. The hash rate of Fractal's free mining has exceeded three times that of Bitcoin Cash's total hash rate. The rapid adoption by miners demonstrates a high level of confidence in Fractal's technology and potential.

The project has attracted participation from major players in the mining sector. Several large mining pools have joined Fractal's mining ecosystem, and 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 the native extension of Bitcoin, differentiates its approach from other extension solutions. By utilizing the existing Bitcoin codebase and modifying block production parameters, Fractal maintains full 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 adherence to the fundamental principles of Bitcoin.

2.2 Technical Specifications

Fractal has introduced several key technological innovations:

• Block Time: Achieving a 30-second block time, significantly improved compared to Bitcoin's 10-minute block time. Faster block times allow for quicker transaction confirmations, greatly enhancing user experience. It also significantly increases the overall network throughput, potentially supporting a wider range of complex applications that require high transaction volumes.

• Mining Mechanism: A unique hybrid mining method is adopted. Among every three blocks, two are free mining, and one is merged mining 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, by merging mine every third block, it enhances security by leveraging Bitcoin's powerful computing power.

• Scalability: The architecture theoretically supports an infinite number of improvements. Each Fractal layer provides a 20-fold increase in capacity compared to the Bitcoin mainnet. 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 realize complex smart contract logic.

• Parallel Execution: The architecture 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: Maintain 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, wallet addresses on Fractal are exactly the same as mainnet addresses. This design provides convenience similar to Ethereum, allowing users to switch networks in their wallet 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. Currently, some major wallets fully support Fractal Bitcoin.

![Fractal Bitcoin: Comprehensive Research Report]###https://img-cdn.gateio.im/webp-social/moments-311de159ab8acf169e82424956f028b0.webp(

3. The Position of Fractal in the Bitcoin Ecosystem

) Comparison of 3.1 with Other Bitcoin Solutions

Fractal has entered the highly competitive market of Bitcoin scalability solutions. Comparison with 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 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 Bitcoin purist ideals and could achieve better integration and adoption within the existing Bitcoin ecosystem.

• Bitcoin Cash ### BCH (: 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 an independent chain or force users to choose, but rather embraces Bitcoin as the mainnet and seeks to extend it locally. The architecture of Fractal allows for the creation of multiple instances to scale together, potentially offering infinite scalability without sacrificing the underlying layer's security or decentralization.

• Lightning Network: Excels in fast, low-cost payments and high privacy, but has limited smart contract functionality and faces channel liquidity issues. In contrast, Fractal offers comprehensive smart contract support, does not require channel management, and provides a simpler user experience.

) 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 advantages through strategic market approaches and a strong built-in user base. With support from a certain wallet, Fractal is able to reach an actively engaged audience of approximately 1 million weekly active users.

Many users have 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 just 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 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 building network effects. By leveraging the existing user base, 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 regard total locked value ###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 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 the competitive focal point.

![Fractal Bitcoin: Comprehensive Research Report])https://img-cdn.gateio.im/webp-social/moments-6c37bb81f5de40366927bd4328af0114.webp(

4. Ecosystem Construction

Fractal's ecosystem development strategy is dedicated to decentralization 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:

• Diversified cross-chain bridge solutions: Unlike some Layer 2 solutions that rely on a single official bridge, Fractal encourages the adoption of various 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 interactions.

• 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 primarily determined by community input and initiatives, rather than being unilaterally decided by a central authority.

• Distributed Infrastructure: Fractal promotes the development of distributed infrastructure and encourages multiple parties to participate in the construction of key components of the ecosystem.

4.2 Launching Users and Developers

Fractal has implemented a series of strategic plans to engage users and developers:

• User Reward Program: After the mainnet launch, Fractal distributed 1 million FB tokens to over 100,000 eligible addresses from certain wallets, establishing a broad base of FB token holders and laying the groundwork for increased participation in Fractal activities.

• Wallet partnerships: Successful collaboration with a certain wallet demonstrates Fractal's ability to work with key players in the cryptocurrency space, significantly expanding its potential user base.

• Developer Incentives: Through various funding programs and developer resources, Fractal incentivizes developers to contribute to the growth of the ecosystem.

4.3 Funding Programs and Project Evaluation

Fractal's funding program aims to support and incentivize projects that contribute to ecosystem growth and align with decentralized principles:

• Post-hoc retrospective model: Fractal adopts a retrospective funding approach, rewarding based on the actual impact of projects rather than speculative commitments. This model encourages high-quality work and substantive results.

• Evaluation Criteria: The project evaluation criteria include its contribution to the ecosystem, technological innovation, alignment with Fractal's decentralization principles, and potential for long-term impact.

• Diverse types of projects: This funding program supports projects from nuclear