Exploring Bitcoin's New Favorite: Is Fractal an Ecological Revolution or a Follower?

Since September, with the community frenzy triggered by Fractal, the market focus has shifted back to the Bitcoin ecosystem. A large number of users have participated in the assets and gameplay launched by Fractal, resulting in persistently high on-chain gas fees. The substantial response to Fractal can be attributed to the overall sluggish market and the lack of fresh narratives. Additionally, based on the precedent of a generous airdrop from a certain trading platform, many users place special importance on the launch of Fractal. It is roughly estimated that over one million addresses participated in the related testnet tasks in hopes of obtaining potential airdrop rewards. Furthermore, the high returns brought by asset protocols like Cat20 have further stimulated the rise in Fractal's popularity.

The official hunger marketing strategy of a certain trading platform has also played a role in fueling the momentum. Due to the initially small circulation of the airdropped FB, as on-chain competition intensified, the price of FB soared, to some extent becoming a "golden shovel," which indirectly accelerated the development momentum of Fractal.

Based on the above reasons, it is particularly necessary to conduct an in-depth analysis of Fractal.

Overview of Fractal: The Native Scaling Solution for Bitcoin

Fractal is a Bitcoin scaling solution that infinitely extends layers through recursion, based on the core Bitcoin code. It is designed as a second-layer network or sidechain for Bitcoin, serving as a native extension to the first layer of the Bitcoin network. While maintaining orthodoxy, Fractal aims to enhance transaction efficiency by accelerating block generation speed and increasing block capacity. Its working principle includes full compatibility with the Bitcoin mainnet - users can transact on the Fractal network, and these transactions can subsequently interact with or sync to the Bitcoin mainnet. At the same time, Fractal offers faster transaction confirmation times, such as 30 seconds per block and a block capacity that is 20 times larger than that of the Bitcoin mainnet.

As a native expansion solution, Fractal can initiate secure asset transfers across layers starting from the Bitcoin main chain. Assets such as Bitcoin, BRC-20, and Ordinals can be bridged through decentralized bridges. The underlying mechanism employs a dynamically replaceable rotating MPC signature mechanism, while also taking into account the specific aspects of the BRC-20 standard.

The functionality of Fractal is more similar to the Bitcoin testnet, supporting some features that have not yet been activated on the mainnet. It acts as a testing ground, providing a better user experience and performance optimization, making it very suitable for thorough experimentation and innovation in complex applications. At the same time, it allows users to participate and provide feedback in a real interactive environment, similar to the significance of EVM layer2 for Ethereum.

Investment and Financing: Strong Partnerships to Promote Development

The Fractal network was developed in collaboration by two companies. The leading Bitcoin wallet provider, which has over 900,000 active users weekly, is one of the main developers and promoters. The company has raised an undisclosed amount of funding in five rounds, with two rounds led by a well-known trading platform and participation from multiple capital firms.

The other party is a crypto-native fund with a portfolio that includes several well-known projects, possessing extensive experience in USD A9 exits, 100x return investments, and the development of globally popular blockchain applications. Overall, the resources of the former are relatively more prominent, attracting a large number of loyal users through its successful brand and previous generous airdrops, providing strong endorsement for Fractal.

With the resources of both parties driving it, Fractal implemented a series of strategic plans to initiate user and developer participation. After the mainnet launch, Fractal distributed 1 million FB tokens to over 100,000 eligible addresses and launched several developer resource support programs, demonstrating its ambition for ecological construction.

Fractal Highlights: Significant Advantages

The core highlight of Fractal lies in the performance optimization and improvements based on the Bitcoin mainnet, as well as the introduction of related asset issuance methods and ecological applications. It can be vividly said that Fractal is a "new wine" in a "old bottle" using the resources of the Bitcoin mainnet for a brand new asset issuance method. Specifically:

The overall design of Fractal allows Bitcoin and assets such as BRC-20 and Ordinals to be bridged through a decentralized bridge. Transactions made by users on the Fractal network can then interact or synchronize with the Bitcoin mainnet, while providing faster transaction confirmation times and larger block capacity compared to the mainnet.

Implementation Path: Multi-layer Expansion, Innovative Mining Mechanism and OP_CAT

( multi-layer expansion mechanism

Fractal enhances Bitcoin transaction speed by recursively expanding layers to establish multiple layers of extension on the Bitcoin main chain, forming a tree structure. This design allows each layer to further fork, increasing the network's parallel processing capability. Each layer can independently process transactions and dynamically adjust the number of layers as needed. During peak transaction times, it can rapidly increase levels to handle more transactions, flexibly responding to various load situations.

This is like building countless new highways parallel to the Bitcoin mainnet on the existing high-speed road. Each new road can expand the Bitcoin mainnet or develop other routes. In this way, each road has its unique value orientation, and users can solve congestion problems without changing their "vehicles".

) rhythm mining

Fractal uses the same PoW consensus mechanism as Bitcoin, which means Bitcoin miners can seamlessly transition to Fractal block mining using existing ASIC, GPU, and other hardware, achieving a win-win situation. By sharing the workload to improve efficiency, it adds extra economic benefits for Bitcoin miners.

Fractal's mining method is divided into two types: permissionless mining and merged mining. Out of every three blocks, two are generated through permissionless mining and one through merged mining. Permissionless mining allows anyone with the appropriate tools to mine Fractal blocks, and anyone can participate in the network by downloading software and running a node. Merged mining is specifically targeted at Bitcoin miners, allowing them to mine Bitcoin blocks and Fractal blocks simultaneously without additional computing power.

( OP_CAT

OP_CAT is an opcode in the Bitcoin scripting language, originally used for string concatenation. It was removed in 2010 due to security and memory usage concerns, as it could lead to excessive memory consumption in scripts. The benefit of OP_CAT lies in its ability to construct the scripting capabilities needed for more complex and trustless Bitcoin infrastructure, which is crucial for implementing advanced transaction conditions and functionalities. The introduction of OP_CAT by Fractal has, to some extent, brought more development possibilities to the Bitcoin ecosystem, such as on-chain applications, smart contracts, and more.

![Exploring the new favorite of BTC: Is Fractal an ecological revolution or a trend follower?])https://img-cdn.gateio.im/webp-social/moments-25447cbfc1a60ccb13745d296d455bc1.webp###

Fractal Token Economics

The Fractal mainnet mainly consumes two types of tokens: FB as general gas and SATS as the exclusive gas for a certain decentralized exchange.

The total issuance of FB is 210 million coins. After the mainnet goes live, only the tokens produced by mining can circulate, while other tokens are subject to a lock-up mechanism, with private placement locked for six months.

• 50% for PoW mining, Bitcoin miners can directly mine FB.
• 15% for the ecosystem treasury, investing in and supporting Fractal ecological projects. Up to 10% of the total amount can be used each year within 10 years.
• 15% allocated to core contributors. All tokens are locked for 7 months, then released linearly over 12 months.
• 10% for community subsidies, to establish cooperation and liquidity programs. Up to 10% of the total amount can be used each year for 10 years.
• 5% for presale, targeting early investors and participants. All tokens are locked for 7 months, after which they are released linearly over 12 months.
• 5% allocated to advisors. Up to 20% of the total amount can be used each year over 5 years.

The official has not clearly stated whether users participating in the testnet will receive airdrop rewards. If there is an airdrop, it may be allocated from community subsidies or the ecosystem treasury. Although the 5% for advisors, 10% for community subsidies, and 15% for the ecosystem treasury are unlikely to be misappropriated by the team, the remaining 45%, controlled by the official in the short term, may carry certain risks after removing the 5% for investors and using 50% for mining, which will have a time cost.

To ensure transparency, the official has published the following address, where users can track the use of funds:

• Ecosystem Treasury (15%)
• Community subsidy (10%)
• Pre-sale (5%)
• Consultant (5%)
• Main Contributors (15%)

![Exploring the new favorite of BTC: Is Fractal an ecological revolution or a follower?]###https://img-cdn.gateio.im/webp-social/moments-1686b51d2ee16e9d7c7eac350063e6b8.webp###

Fractal Ecosystem Overview

( CAT20

Currently, the most popular ecological protocol of Fractal is undoubtedly CAT20. This protocol was launched on September 11, with a total supply of 21 million. Although the lack of clarity regarding the code and project information may pose risks, a surge of users participating in minting, driven by community sentiment and the dissemination of various opinion leaders, has led to a spike in Gas fees on the Fractal chain, reaching nearly 7000 at its peak. The extreme popularity caused the FB price to be speculated up to 40 dollars.

Compared to the existing Bitcoin protocol, CAT20's main innovation lies in the use of the OP_CAT opcode, perfectly adapting to the Fractal ecosystem. Its modular and programmable minting provides flexible and composable rules for complex decentralized applications. Another major feature is that transactions are fully verified by miners, reducing reliance on indexers, ensuring that all transactions are directly confirmed by Bitcoin miners, thus lowering the risk of being affected by inconsistencies or manipulations from indexers.

As of the time of writing, a certain trading platform has stated that it is researching the CAT20 trading market, and official resources support are on the way. However, the official social media account of the CAT20 protocol was suddenly frozen, which seems to increase uncertainty. Since the protocol is still in its early stages, its feasibility still needs further observation and discussion.

![Exploring the New Favorite of BTC: Is Fractal an Ecological Revolution or a Follower?])https://img-cdn.gateio.im/webp-social/moments-171113404f3dd01032f937984fa6c8c2.webp(

) BTCTerminal

BTCTerminal has performed well in terms of social media attention. It was originally a provider of Rune protocol infrastructure, but later decided to rebrand and focus on the broader Bitcoin ecosystem. It has now launched a comprehensive trading market for the Fractal ecosystem, supporting functions such as querying minting progress and wallet balances, and will also support Cat721 in the future. Recently, it launched a mining activity that allows the rental of ASIC miner computing power to participate in FB mining, with a total amount of $50,000, but the specific risks and returns need to be assessed comprehensively.

UniWorlds

UniWorlds is a metaverse project built on Fractal, dedicated to creating immersive environments on Fractal and developing community and game toolkits for building interoperable virtual worlds. It is also the first major application on Fractal. On August 8, it was announced that they completed a seed round of financing led by a certain trading platform and UGC platform manufacturers. As a project that has clearly received official resource support, the subsequent development of UniWorlds is worth paying attention to.

( BRC20

The BRC20 functionality, after being activated at block 21000, has indeed kept the on-chain gas fees at a high level for a long time, to some extent dispersing the heat of Cat20. However, from the perspective of trading volume and market capitalization, top inscription projects have not performed prominently, with a common presence of startup projects or teams dominating. Whether any projects will stand out in the future or continue to remain sluggish still needs further market testing.

![Exploring the new darling of BTC: Is Fractal an ecological revolution or a follower?])https://img-cdn.gateio.im/webp-social/moments-2b583156ca830db2afaaedb3d9a017cf.webp###

Considerations of Different Participant Groups

Retail Perspective

The new narrative brought by Fractal's novel asset protocols and on-chain applications has attracted a portion of on-chain retail investors. With the mentality of "better to lose money than to miss out," they actively participate in the minting and speculation of new assets. Community power is a major driving force. With 50% of the time cost spent on POW output, retail investors may hold a considerable amount of chips in the short term, and this might currently be a good opportunity for profit.