Written by: Nora / Mat / Darl / WolfDAO

Editing and proofreading: Punko

Preface

Since September, with the community sentiment aroused by Fractal, the market's focus has returned to the entire Bitcoin ecosystem, especially allowing a large number of users to participate in the related assets and gameplay launched by Fractal, which ultimately kept the on-chain gas high. The reason why Fractal can cause such a large amount of heat is first related to the current overall sluggish market and the lack of fresh narratives. Secondly, based on the previous practice of Unisat officials generously airdropping pizza, many users obviously attach importance to the launch of Fractal this time, so that they are extremely involuted during the test network stage. It is roughly estimated that more than 10 million addresses have participated in the corresponding test network tasks to win airdrop rewards. Finally, it is related to the high returns brought by asset protocols such as Cat20. As the money-making effect continues to ferment, the popularity of Fractal continues to rise.

In addition, Unisat’s official hunger marketing also added fuel to the fire, because the original airdropped FB had a very small circulation, but as the competition on the entire chain intensified, the price of FB soared, becoming a golden shovel in a certain sense, which indirectly accelerated the development of Fractal.

Based on the above reasons, the analysis of Fractal is very necessary.

Fractal Overview: A Native Scaling Solution for Bitcoin Scaling

Fractal Bitcoin is a Bitcoin scaling solution that recursively extends infinite layers on top of the BitcoinCore code itself. Designed as a second-layer network or sidechain for Bitcoin, it is a native extension of the first-layer Bitcoin network, and while maintaining orthodoxy, it aims to improve transaction efficiency by accelerating block times and increasing block capacity. Its working principles include full compatibility with the Bitcoin mainnet (users can conduct transactions on the Fractal Bitcoin network, which can then interact or synchronize with the Bitcoin mainnet), while providing faster transaction confirmation times (such as 30-second block times) and larger block capacity (20 times that of the Bitcoin mainnet).

As a native scaling solution, Fractal can enable secure asset transfers across various layers starting from the Bitcoin main chain. Bitcoin as well as assets such as BRC-20 and Ordinals can be bridged through a decentralized bridge. The underlying mechanism is a rotating MPC signature mechanism with dynamic replacement, taking into account specific aspects of the BRC-20 standard.

Fractal is more like a Bitcoin testnet in terms of functionality. It supports some functions that have not yet been activated on the mainnet, similar to a testing ground, providing better UX and performance optimization, and is very suitable for complex applications to experiment and innovate as much as possible. At the same time, it allows users to participate and give real feedback in a real interactive environment, similar to the significance of EVM layer2 to Ethereum.

Fractal native solution Source: @10xWolfDAO

Investment and Financing: Development Power Under the Powerful Alliance

Fractal Bitcoin Network was developed by UniSat and Block Space Force. As the main developer and promoter, Unisat is a leading Bitcoin wallet with more than 900,000 active users per week. It has received five rounds of financing of undisclosed amounts, two of which were led by OKX and Binance, with participation from Waterdrip Capital, ABCDE Capital and others.

Block Space Force is a crypto-native fund with a portfolio that includes well-known projects such as Babylon, Pendle and Aevo. It also has decades of experience in USD A9 exits and 100x investments, as well as developing the world's most commonly used blockchain applications. Overall, the resources of the two projects are relatively more prominent, and Unisat has attracted more loyal users through its successful brand architecture and the previous generous Pizza airdrop, so Fractal is undoubtedly the best endorsement for Fractal.

Driven by the resources of the two project parties, Fractal implemented a series of strategic plans to initiate user and developer participation. After the mainnet was launched, Fractal distributed 1 million FB tokens to more than 100,000 eligible addresses from OKX wallets and UniSat wallets, and carried out various developer resource funding programs, which shows Fractal's ambition for its ecological construction.

“Fractal” OR “Type”

Fractal is often confused with "fraction" and "fractal" in Chinese translation. Of course, the literal meaning remains unchanged, but if you must pursue a correct explanation, then fractal is a better explanation. Fractal is a mathematical concept used to describe complex geometric figures with self-similar characteristics. Fractal figures look similar at different scales, emphasizing self-similarity and continuous recursion. In fact, the use of fractals also proves that Fractal is highly consistent with the Bitcoin mainnet.

In the official introduction, fractal is a self-similar recursive property. The expansion of Bitcoin requires each layer to have the essence of fractal: consistency at all levels, expansion of as many levels as needed, and reasonable logical order. In essence, this is the fractal of Bitcoin.

Fractal highlights: advantages are evident

The highlight of Fractal itself is its performance optimization and improvement based on the Bitcoin mainnet, as well as the related asset issuance methods and ecological applications it has launched. It can be said that Fractal is a new wine in a new asset issuance method in an old bottle of Bitcoin mainnet resources. Specifically:

Fractal BTC highlights summary Source: @10xWolfDAO

The overall design of Fractal Bitcoin allows Bitcoin and assets such as BRC-20 and Ordinals to be bridged through a decentralized bridge, namely pizza swap. For example, the transaction records made by users on the Fractal Bitcoin network will then interact or synchronize with the Bitcoin mainnet, providing faster transaction confirmation times and larger block capacity than the mainnet.

Implementation path: multi-layer expansion, mining mechanism and OP_CAT

Multi-layer expansion mechanism

Fractal increases the speed of Bitcoin transactions through recursive expansion layers. It builds multiple levels of expansion layers on the Bitcoin main chain to form a tree structure. This design allows each layer to be further forked, increasing the network's parallel processing capabilities. Each layer can process transactions independently and dynamically adjust the number of layers as needed. During peak trading times, it can quickly add layers to handle more transactions, so that the network can flexibly cope with various loads.

Just like other L2 and sidechains build another highway, Fractal can build countless highways parallel to the Bitcoin mainnet. Each road can be used to expand the Bitcoin mainnet or to expand another road. In this way, each road has its own unique value orientation, and users can solve the congestion problem without changing transportation.

Fractal operates through a recursive extension layer Source: @10xWolfDAO

Cadence Mining

Fractal uses the same PoW consensus mechanism as Bitcoin, which means that BTC miners can seamlessly switch to Fractal block mining using current ASICs, GPUs, and other existing hardware. This is equivalent to killing two birds with one stone, improving efficiency by sharing the workload, and adding an extra share of economic benefits to Bitcoin miners.

At the same time, Fractal's mining methods are divided into permissionless and merged mining. Two out of every three blocks are generated through permissionless mining and one is generated through merged mining. For permissionless mining, anyone with the right tools is allowed to mine Fractal blocks. Anyone can participate in the network by downloading the software and running a node. Merged mining is specifically for BTC miners, allowing miners to mine BTC blocks and Fractal blocks at the same time without taking up additional computing power.

OP_CAT

OP_CAT is an opcode in the Bitcoin scripting language, originally used to concatenate two elements into a string. However, it was removed by Satoshi Nakamoto in 2010 for security and memory usage reasons, as it could cause scripts to use too much memory, creating very large stack values ​​from small inputs. The benefit is that it has the scripting capabilities required to build more complex and trustless Bitcoin infrastructure, which is essential for implementing advanced transaction conditions and features. The introduction of OP_CAT in Fractal Bitcoin can, to a certain extent, bring more development possibilities to the BTC ecosystem, such as on-chain applications, smart contracts, and so on.

Fractal Token Economics

The Fractal Bitcoin mainnet will mainly consume two types of tokens, namely $FB and $SATS. The former is used as general gas, and the latter is used as exclusive gas for pizzaswap.

The total circulation is 210 million. After the mainnet is launched, only the tokens produced by mining can be circulated. Other tokens have a lock-up mechanism, of which private placements are locked for half a year.

50% - PoW mining, Bitcoin miners can directly mine $FB.

Estimated Proof of Work Mining Schedule:

Fractal Proof of Work Mining Schedule Source: @10xWolfDAO

• 15% - Ecosystem Treasury, used to invest and support projects on the Fractal ecosystem. Up to 10% of the total pool may be used annually over 10 years.

• 15% - Core Contributors, who build and maintain the Fractal core software. All tokens are locked for 7 months and will be released linearly until 12 months.

• 10% - Community subsidies, partnership building and liquidity programs. Up to 10% of the total pool will be available annually for 10 years.

• 5% - Presale, for early investors and network participants, all tokens are locked for 7 months and will be released linearly until 12 months.

• 5% - Advisors, people who provide strategic advice and support to the project. Up to 20% of the total pool can be used annually for 5 years.

Fractal distribution plan Source: @10xWolfDAO

At present, the official has not made it clear whether there will be airdrop rewards for users who participate in the test network. If there is, airdrop subsidies may be made in the community subsidy or the ecosystem treasury. Although the 5% for consultants, 10% for community subsidies, and 15% for the ecosystem treasury are unlikely to be diverted by the team to crash the market, but after deducting 5% for investors, 50% for mining will have time costs, and the remaining 45% will still be controlled by the official in the short term, which may be risky.

For complete transparency, the official website allows users to track the use of funds at the following official addresses:

• Ecosystem Treasury (15%): bc1pukzhdkdghqajp3zvwkx65e7uv5zma6lzalet4xauf3p5c0vdg8wqk2avv6

• Community Grant (10%): bc1pdrqk5xv3tfpmdsuegnt5a63xucf475r3l0vqg6zulwmtzezg7h6sd2pqx3

• Presale (5%): bc1put2rhzx0cwz552epm25dt2rexg2tzx9sws2sjcezsjm9y7h7ct8svhpzf2

• Consultant (5%): bc1pm2h0420vmgayhzs59d5nf0mzjlf3q6vrnlpqytefe3rk6a8ku3zq59walm

• Major Contributor (15%): bc1ppvqe8ugt27kgw4trvnzjvcfzn52702tq2ahe7cgzw0jsv67vrhysvgnndz

Fractal Ecosystem Overview

CAT 20

The hottest ecological protocol of Fractal is undoubtedly the CAT20 protocol launched by CAT Protocol. The protocol was released in the early morning of September 11, with a number of 21 million. Its code has traces of development by Chinese people, and the specific information of the project party has not been disclosed. Although the unclear information of the code and the project party may have Rug risks, with the promotion of community sentiment and the spread of major KOLs, a large number of users have flocked to mint, and the Gas on the Fractal chain has been rolled all the way, reaching nearly 7,000 at the highest. The extremely high popularity caused the official token FB to be hyped up to a price of 40U, which shows the degree of FOMO of the entire crypto circle for the CAT20 protocol. The joke is that Danny Plainvie, the founder of Motoswap, CAT Protocol and the Great Wizard Quantum Cat team also staged a drama of the true and false Monkey King for the CAT20 protocol. The three parties each insisted on their own opinions, which just proved that the protocol has gone viral.

Comparing the CAT protocol with the existing Bitcoin protocol, we found that one of its major innovations is the use of the OP_CAT opcode, which is a perfect fit for Fractal's ecosystem. Its modularity and programmable casting provide flexible and composable rules for complex decentralized applications such as AMM, lending, and staking. Another outstanding feature is that its transactions are fully verified by miners and reduce dependence on indexers. Unlike token standards that may rely on external or third-party verification, CAT20 ensures that all transactions are directly confirmed by Bitcoin miners, making the protocol itself less susceptible to indexer inconsistencies or manipulation.

As of the time of writing, UniSat said that the CAT20 trading market is under study and official resource support is on the way, but the official X account of the CAT20 protocol has been suddenly frozen, which seems to increase uncertainty. In short, since the protocol is still in its infancy, there are still many issues to be discussed about the feasibility of the protocol, and further attention needs to be paid to the specific planning and performance.

BTCTerminal

BtcTerminal is a popular project in terms of the number of Twitter followers and KOL attention. It was originally a Runes protocol infrastructure provider, with products including Runes browser, Runes trading market, Runes encyclopedia, etc. Later, it was decided to rename the original rune project RunesTerminal to BtcTerminal, rebrand and integrate it into Fractal Bitcoin. After the name change, the relevant runes will continue to be supported, while the new focus will be placed on the broader Bitcoin ecosystem. Currently, a comprehensive trading market related to the Fractal Bitcoin ecosystem has been launched, which can query Mint progress, wallet balance, etc., and will also support the upcoming Cat721. The official launched a mining pool activity some time ago, where you can rent the computing power of ASIC mining machines to participate in $FB mining, with a total amount of US$50,000, but the specific risks and benefits need to be considered comprehensively.

UniWorlds

UniWorlds is a metaverse project built on Fractal. It creates an immersive environment on Fractal, develops communities and game toolkits that can connect virtual worlds, and will launch a BTC ecosystem game creation platform. At the same time, UniWorlds is also the first large-scale application on Fractal, a BTC expansion solution developed by the UniSat team. On August 8, it announced the completion of the seed round of investment jointly led by UniSat and UGC platform manufacturers. It can be said that Uniworlds is indeed a project with clear official resource support, and further observation can be made as the ecosystem develops.

BRC20

After the BRC20 function was activated at block 21,000, the gas on the chain did remain at a high level for a long time, which attracted the popularity of Cat20 to a certain extent. But in fact, whether in terms of trading volume or market value, the top few inscription projects did not go well, and there were generally cases of startups or studios booking the venue. As for whether there will be subsequent projects that stand out or remain silent, these all need to be tested by the market.

Participating groups: Different perspectives of retail investors, miners and VCs

Retail investors’ perspective

Because some new narratives and high popularity of asset protocols or on-chain casinos brought by Fractal will attract some retail investors on the chain. Adhering to the idea of ​​losing money rather than missing out, they will actively participate in the minting of new assets and hype prices. Of course, the main driving force is the community, and the power of the community is the guide. With a time cost of 50% of POW output, retail investors can control more chips in a short period of time, and now may be the best time to make a profit.

Miner's perspective

Bitcoin mainnet miners can mine BTC and produce FB. If the entire Fractal ecosystem can continue to develop in a positive direction, and application scenarios that consume FB continue to emerge, when the output is less than the FB consumed, miners can push up the FB price to gain more benefits. On the contrary, if the ecosystem is stagnant, the value of FB will continue to decline over time. After it is actually listed, when the value of FB is estimated to be similar, it may be the best time for miners to ship, which is also a risk for retail investors.

VC and other resource representatives

For example, OKX wallet has launched the inscription trading market. Will the first-tier exchanges list FB or control the entire Fractal ecosystem through resources and institutional strength? These are all issues worth exploring. The entry of large capital may have a positive impact on the development of the ecosystem, but it will be dominated by institutional dealers, and the voice of retail investors will be greatly weakened. The interests of VC institutions themselves will be the main focus.

Conclusion: The development path under insufficient innovation needs to be examined

From the current perspective, Fractal itself does not have many innovative points, and is mainly focused on compatibility with and optimization of the main network. The development of the ecosystem is still in its early stages, and it is unknown whether new projects will emerge and who will eventually come out. More answers will require time and market testing.