The co-founder of Taproot Wizards, Udi Wertheimer, has proposed the launch of the new CATNIP tokens, based on OP_CAT.
Runes were a mistake…. but OP_CAT fixes this!
INTRODUCING CATNIP: bitcoin-native CAT-powered tokens
The user experience of BRC-20s and Runes felt disappointing to most crypto enthusiasts. While ordinals and inscriptions are widely considered to be a superior version of NFTs on… pic.twitter.com/l3p5hc38b3
— Udi | BIP-420 
(@udiWertheimer) September 11, 2024
The new CAT protocol on Bitcoin
The new Covenant Attested Token (CAT) protocol is based on Bitcoin’s UTXO, and it is used to create tokens.
It is validated by miners and uses smart contract covenant to manage the minting and transactions of tokens.
It is applied exclusively by Bitcoin Script to Layer-1 of Bitcoin, so it does not rely on third-party off-chain to function, and there is no risk of inconsistency of the indicator. CAT tokens inherit the native Proof of Work security of Bitcoin.
Note that CAT tokens can be verified in Script, and above all, they can also be used in other smart contracts and in more complex and interconnected decentralized applications, such as DEX based on AMM (Automated Market Makers), loans, and staking.
Furthermore, the CAT protocol allows the trustless connection of assets between different blockchains, thus enabling dApps to operate on multiple blockchains.
With the new CAT protocol, it is possible to create both classic fungible tokens, with the CAT20 standard, and non-fungible tokens (NFT) with the CAT721 standard.
In order for the new CAT protocol to actually start being used on Bitcoin, OP_CAT must be reactivated.
The sleeping OP_CAT
OP_CAT was originally an opcode in Bitcoin disabled in 2010.
Over time, however, it has been proposed several times to reactivate it with a soft fork.
Its main use is to allow the data provided by the creator of a script to be concatenated with the data provided by someone else who spends from that script.
Therefore, in the current state, the CAT protocol cannot yet be used on the layer-1 of Bitcoin (its public blockchain), but it is not the only proposal that asks to reactivate OP_CAT.
The proposal of the CATNIP protocol
Specifically, Wertheimer proposed the CATNIP protocol to create tokens.
He stated that the protocol currently used to create and trade tokens on the Bitcoin blockchain, Rune, is a mistake, and that OP_CAT solves the problem.
He says that the user experience with the BRC-20 protocol and Rune has been disappointing for most cryptocurrency enthusiasts, and that the source of the frustration is a fundamental problem with these protocols, namely the fact that Bitcoin consensus (the nodes and miners) are unaware of their existence.
All this leads to having to overcome cumbersome steps to exchange BTC for Rune or vice versa.
CATNIP solves this problem, thanks to the recursive covenants OP_CAT that already the Purrfect Vault. This would allow the creation of true native tokens on Bitcoin, usable within the Bitcoin Script. No other protocol for creating tokens on Bitcoin can currently do this.
The idea is that, when (and if) OP_CAT is reactivated on the Bitcoin mainnet, CATNIP will be especially useful for stablecoins.
Fractal: the scaling solution for the Bitcoin network
The new CAT protocol is already monopolizing the Fractal network.
https://twitter.com/RunesCommunity/status/1833771779661471851
In particular, Fractal claims to be the only scaling solution for Bitcoin that uses Bitcoin Core’s own code to scale recursively thanks to unlimited layers.
The mainnet went live just a few days ago, and it has a partnership with OKX Wallet.
The Fractal Mainnet is LIVE!
We’re thrilled to announce that Fractal’s first block has been mined, marking the beginning of a new era for scaling Bitcoin natively. 
Fractal’s genesis block carries the same message as Bitcoin's: "The Times 03/Jan/2009 Chancellor on brink… pic.twitter.com/YtjGG47Z7a
— Fractal Bitcoin (@fractal_bitcoin) September 9, 2024
They are also working on a voting platform that will use OP_CAT, thus giving Fractal holders the possibility to vote on proposals.
It should be noted, however, that Fractal is not Bitcoin, but a crypto project based on the Bitcoin blockchain.
The news after Taproot
So, as for the OP_CAT function, it has not yet been reactivated on Bitcoin, after being disabled in 2010, but for example on Fractal it is already available.
The Bitcoin community will have to decide whether to re-add it, and to do so a soft fork similar in some ways to the one that introduced Taproot a few years ago will be needed.
If it is re-added, it will be possible to start using the CAT protocol also on the layer-1 of Bitcoin.
Thanks to the new CAT protocol, it will be possible, for example, to create tokens with CATNIP, or other similar protocols.
It will be possible to create both normal fungible tokens CAT-20 and NFTs in CAT-721 format.
Currently, it is not possible to create tokens using native Bitcoin functions, so both creating and using them involves cumbersome processes and has limited potential.
With protocols like CATNIP, even the Bitcoin blockchain will be able to allow the creation and transfer of tokens with native functions, making everything simpler and with much greater potential.
For example, one could create real DEX on Bitcoin to allow the direct exchange of BTC into stablecoin and vice versa.
The path launched with the Inscriptions introduced by Taproot, and with the Ordinals created from the Inscriptions, and which passes through the Tune protocol and the BRC-20 tokens, could lead to a further subsequent step to ensure that even Bitcoin develops its own native DeFi.
