Fractal Bitcoin: Comprehensive Research Report

Summary

Fractal Bitcoin was launched on September 9, 2024, representing an innovative direction for Bitcoin scaling solutions. Although Fractal has captured a significant portion of Bitcoin's hash power within the first few days of its launch, it remains relatively unknown in the global crypto community. This study aims to unveil this innovative project that is rapidly gaining attention within the Bitcoin ecosystem.

Key Points

1. Innovative mining approach: Fractal introduces a hybrid mining model that combines merged mining and permissionless mining. This model provides a new perspective on PoW, demonstrating that PoW remains a robust method for network security.

2. Bitcoin's Pioneer 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.

3. Strong initial user base: Through partnerships with certain wallets, Fractal successfully attracted the most active Bitcoin users from the start. This early adoption helped Fractal avoid the "cold start" problem commonly 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 Fractal ahead of the current Bitcoin trends.

1. 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 background of the Bitcoin scalability discussion. In 2017, the Segregated Witness (SegWit) soft fork aimed to increase the block capacity of Bitcoin, which led to some controversial hard forks. Since 2018, increasing attention has shifted towards second-layer solutions. In this ongoing exploration of Bitcoin's scalability and functionality enhancement, Fractal has emerged as a new approach.

Fractal's mainnet officially launched on September 9, 2024, at 00:00 UTC. This launch 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 rate, while free mining on Fractal made up 2% of Bitcoin's hash rate. The free mining hash rate on Fractal has surpassed the total hash rate of some competitors. 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. Several large mining pools have already joined Fractal's mining ecosystem. Additionally, there are other well-known mining pools 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, 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 approach 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 has implemented 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.

• Mining Mechanism: Fractal employs 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 the production of two-thirds of the blocks.

• Scalability: The Fractal architecture theoretically supports unlimited layers of improvement. Each Fractal layer offers a 20-fold capacity increase compared to the Bitcoin mainnet. This exponential scalability model allows Fractal to address Bitcoin's throughput limitations while maintaining the security characteristics of the underlying layer.

• Smart Contract Functionality: By implementing the OP_CAT opcode, Fractal has achieved Turing-complete smart contracts on a Bitcoin-based platform. 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: Fractal's architecture allows different applications to run their own instances, so specific optimizations do not affect the entire network.

• 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.

( 2.3 Unique User Experience

Unlike other Bitcoin Layer 2 solutions, wallet addresses on Fractal are identical to mainnet addresses. This design offers 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 enables users to continue using their Bitcoin mainnet addresses for Layer 2 activities. As of now, several 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 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. In contrast, Fractal takes a Bitcoin-native approach aimed at expanding Bitcoin's capabilities without introducing external architectures.

• Certain hard forks: Some hard forks appeared as forks of Bitcoin, aiming to improve scalability through larger block sizes. This approach has led to divisions within the Bitcoin community. 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 mainnet and seeks to scale it locally.

• 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 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. With the support of a certain wallet, this enables Fractal to reach an actively engaged audience.

Many users already hold assets like 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 often 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 sidestep the barriers to early adoption.

In addition, Fractal's strategy regarding growth metrics also distinguishes it 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 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 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 numbers as the competitive focal point.

4. Ecosystem Development

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

( 4.1 Decentralization Concept

The core of building the Fractal ecosystem 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 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 mainly 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 Launch users and developers

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

• User Rewards 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.

• Partnership with a certain wallet: The success of collaboration with a certain wallet demonstrates Fractal's ability to partner with major 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 the principles of decentralization:

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

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

• Diverse project types: This funding program supports a wide range of projects, from core infrastructure development to application layer innovation, ensuring a comprehensive ecosystem development.

4.4 Outstanding Funding Projects

Through Fractal's funding program, several key projects have received support:

• sCrypt: Enhances Fractal's scripting capabilities to implement complex smart contracts on the Bitcoin network.

• A certain mining pool: As the main mining pool, it contributes to the security of Fractal and provides key feedback on mining functionality.

• Nubit: Develop data availability ###DA### layer, supporting scalable applications, including Ordinals and Layer 2 solutions.

• DeTrading: Supports cross-chain atomic swaps without the need for a central authority or collateral, simplifying trustless transactions on Fractal.

• UniWorlds: in