Fractal Bitcoin: Comprehensive Research Report

Abstract

Fractal Bitcoin was launched on September 9, 2024, representing a new direction in the expansion of Bitcoin. Despite capturing a significant portion of Bitcoin's hash power within a few days of its launch, Fractal remains relatively unknown to many in the global crypto community. This study aims to unveil 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 offers a new perspective on PoW, demonstrating that PoW remains a robust network security method even as the industry shifts toward PoS.

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 testing ground for Bitcoin upgrades and innovations.

3. A strong user base from day one: By collaborating 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 over-speculation 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, which positions Fractal at the forefront of 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 context 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, more and more attention turned to second-layer solutions, such as the Lightning Network ( Lightning Network ). In this ongoing exploration of Bitcoin's scalability and functional enhancement, Fractal 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 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 the free mining on Fractal accounted for 2% of Bitcoin's hash rate. To better understand these figures, Fractal's free mining hash rate has surpassed 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, Antpool, and Spiderpool have joined Fractal's mining ecosystem. Additionally, several other well-known mining pools are preparing to participate, indicating an increasing interest in the Fractal mining network and its 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 the 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 upholding Bitcoin's fundamental principles.

2.2 Technical Specifications

Fractal has introduced several key technological innovations:

• Block time: Fractal achieves a block time of 30 seconds, which is a significant improvement compared to Bitcoin's 10 minutes block time. This faster block time enables quicker transaction confirmations, greatly enhancing user experience. Furthermore, 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 can be 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 the production of two-thirds of the blocks. At the same time, it enhances security by utilizing Bitcoin's powerful hash rate for the joint mining of 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 Fractal architecture theoretically supports unlimited 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 completeness for smart contracts on a Bitcoin-based platform. OP_CAT is a simple concatenation operation that, when combined with other opcodes, can achieve complex smart contract logic. This functionality 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, enabling specific optimizations without affecting 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 ( 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 identical to mainnet addresses. This design offers Ethereum-like convenience, allowing users to switch networks in their wallets to access different layers. Unlike 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 Position of Fractal in the Bitcoin Ecosystem

Comparison with Other Bitcoin Solutions 3.1

Fractal has entered a highly competitive Bitcoin scaling solution market. 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 adopts a Bitcoin-native approach aimed at expanding Bitcoin's capabilities without introducing external architectures. This approach may align more closely 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, 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 for 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 standalone chain or force users to make a choice, but rather embraces Bitcoin as the mainnet and seeks to scale it locally. Fractal's architecture allows for the creation of multiple instances to scale together, potentially providing 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 capabilities are limited and it faces channel liquidity issues. In contrast, Fractal offers comprehensive smart contract support, does not require channel management, and provides a simpler user experience.

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

) 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 support from major wallets, this allows Fractal to reach an audience that has already been actively engaged.

Many wallet users already hold assets such as BRC20 tokens and Runes in their wallets. These users naturally want a cheaper, faster, and more feature-rich trading environment. Fractal just happens 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 – 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 sets it apart from many other blockchain projects. While many Layer 2 solutions and new blockchains view Total Value Locked ### TVL ( as a key 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 their competitive point.

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

4. Ecosystem Development

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

) 4.1 Decentralization Concept

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

• Diversified cross-chain bridge solutions: Unlike some Layer 2 solutions that rely on a single official bridge, Fractal encourages the use 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 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 Launch Users and Developers