Preface
With the continuous development of the Bitcoin ecosystem, the number of users and transaction volume has significantly increased. However, since the introduction of the Ordinals and BRC-20 token protocols, the Bitcoin network has faced severe challenges in scalability and transaction efficiency. Especially during periods of market activity, high gas fees and on-chain congestion have led to failed transactions of inscriptions and runes, causing small capital users to hesitate to enter this field.
To address these issues, more and more projects have joined the research and development of Bitcoin expansion solutions, such as Nubit and STRK. Among them, the most attention has been given to the UniSat team. Over the past six months, the UniSat team has collaborated with L1F (Layer 1 Foundation) to promote the standardization of brc20-swap on Layer 1, making it part of the BRC-20 standard upgrade, and has preliminarily verified that its product, Unisat Swap, can operate normally on the Bitcoin mainnet. In addition, the UniSat team has also received investments from two major exchanges, OKX and Binance, providing strong financial support for its development.
In addition to promoting the standardization of Swap, the UniSat team also systematically "fractures Bitcoin" through a method called Fractal Bitcoin. UniSat will launch a Swap product called Fractal Swap, which functions the same as the mainnet Swap module to ensure that projects on Fractal Bitcoin have good liquidity from the beginning. In subsequent iterations, Bitcoin and other mainnet assets can also exist as BRC-20 packaged assets on Fractal Bitcoin, providing greater flexibility.
Recently, many hot events surrounding UniSat have attracted widespread attention. For example, SATS will be used for Gas fees on the UniSat platform, and UniSat has also distributed Pizza airdrops to users who have interacted on the platform in the past. In addition to the ongoing Fractal Bitcoin Fractal Swap product, these initiatives are important steps for UniSat to promote the resurgence of BRC-20. This article will first provide a basic analysis of PIZZA and SATS inscriptions, exploring their historical background and holding address situation. Finally, this article will delve into the concept and application of Fractal Bitcoin, and compare it with the main competitors, Runes and RGB++, to explore its potential and prospects in expanding the Bitcoin network. Through the discussion of these topics, we hope to provide readers with a perspective on the current development and future possibilities of the Bitcoin ecosystem.
I. The Purpose of Unisat - AMM Mechanism DEX on BRC20
The founder of BRC20, Domo, established an organization called Layer 1 Foundation, appointing several leading BRC20 indexers as collaborators, including Unisat. The data of the BRC20 standard is stored in Segregated Witness, so the indexers in the BRC20 standard can be modified. Unisat aims to modify the indexers in the BRC20 standard to achieve a fully BRC20-compliant AMM mechanism DEX on Layer 1, similar to decentralized automatic market makers like Uniswap and 1inch. Currently, both OKX and Unisat's BRC20 market transactions are not automatically matched, but are similar to trading NFTs, requiring orders to be placed and waiting for buyers to accept them.
Based on this goal, Unisat has carried out a series of narratives and empowerment to promote the AMM mechanism DEX.
II. SATS Designated as Gas Fee - Application Attributes
2.1 Basic Introduction
SATS is the ninth inscription token on the BRC-20 protocol, with the full name being satoshis, the smallest unit of Bitcoin, abbreviated as sat, also known as a bit. 1 BTC = 100 million satoshis. The total supply is 21 trillion, corresponding to 21 million BTC.
On July 7th, UniSat officially confirmed that both Unisat Swap and Fractal Bitcoin are based on the BRC-20 protocol and use BRC-20 SATS as natural gas fees. As the largest wallet hub in the BRC-20 ecosystem, UniSat not only supports SATS as gas fees for swaps, but also uses it as the basic transaction token for brc20swap. This move has brought a large number of active users to SATS, and most importantly, has empowered SATS with application attributes.
2.2 Event Analysis
The $SATS consumed as Gas Fees will form a deflationary economic model, promoting the deflation of $SATS.
The first wave of positive news has already been fully released, and the second wave of positive news will have to wait until Fractal Bitcoin is officially launched.
2.3 Holding Address Analysis
From the OKX inscription trading platform, it can be seen that SATS currently has a market value of 9817 BTC, approximately $620 million, with 48,297 holders.
Source: OKX Figure 1.1
As shown in Figure 1.2, it can be seen from the top ten holding addresses of SATS inscriptions that the chips are concentrated, with the largest holder accounting for 43.82% of the chips, indicating a significant dominant position.
Source: Unisat Figure 1.2
III. Pizza Airdrop - Meme Attributes
3.1 Basic Introduction
Years ago, someone used 10,000 BTC to purchase two pizzas, an event that gave BTC an actual price and had a crucial historical impact on the entire cryptocurrency industry. The Pizza inscription was born based on this historical significance and was endowed with meme attributes.
Pizza is the official airdrop inscription of Unisat and is also the first 5-character inscription. The total supply of the five-character inscription airdropped by the Unisat official is 21 million, all distributed through airdrops. The maximum number of airdrops per address does not exceed 18,000, and the number of holders is large and dispersed.
3.2 PIZZA Airdrop Rules
Pizza's airdrop quantity to each address is basically 100, and based on the total supply of 21,000,000, there were over 200,000 wallets airdropped at the time. The following are the conditions for claiming pizza:
(1) Addresses that have interacted with UniSat services within 3 months
(2) Addresses holding more than 500 UniSat points
(3) Addresses that have interacted within the brc 20-swap module
(4) UniSat OG Pass holders are eligible to receive the inscription
3.3 Holding Address Analysis
From the OKX inscription trading platform, it can be seen that Pizza currently has a market value of 1461 BTC, approximately $93 million, with 100,255 holders, which is about half the number of wallets that received the airdrop.
Source: OKX Figure 2.1
As shown in Figure 2.2, it can be seen from the top ten holding addresses of the Pizza inscription that the holding addresses for PIZZA are too dispersed, and the distribution of chips is also too dispersed, with a large number of holders and no clear dominant holding address.
Source: Unisat Figure 2.2
III. Fractal Bitcoin - Platform Attributes
3.1 Basic Introduction:
Fractal Bitcoin is a method of recursively expanding the processing capacity of the Bitcoin network through virtualization. It uses the Bitcoin core code to achieve the coexistence and coordination of multiple instances and maintain consistency on the Bitcoin mainnet, aiming to achieve infinite scalability while ensuring consensus consistency and network security by maintaining the engineering structure of the Bitcoin system.
As shown in Figure 3.1, in simple terms, it is like a Layer 2 for BTC, forking the BTC code and adjusting the block confirmation time (adjusted to within one minute), and should be more aggressive, such as supporting banned features like op_cat.
Source: Unisat Figure 3.1
3.2 Main Architecture:
The basic architecture of Bitcoin and the fractal network is connected and operated through a node (fractald).
Source: Unisat Figure 3.2
Applications:
Fractal Swap: A more flexible BRC20 exchange mechanism, also supporting Bitcoin. Asset Bridge: A bridge for transferring assets between the Bitcoin mainnet and the fractal network. UniWorlds: An application that brings a large number of real-world transactions into the Bitcoin network.
Infrastructure:
UniSat Wallet: A wallet that allows for quick switching between the Bitcoin mainnet and fractal assets. UniSat Explorer: A browser that can easily query both the Bitcoin mainnet and the fractal network. UniSat API: A unified API that can be used for both the Bitcoin mainnet and the fractal network.
Source: Unisat Figure 3.3
3.3 Limitation Analysis:
Limitations of DEX: The DEX eventually implemented by UniSat can achieve BRC20-to-BRC20 swaps, but theoretically cannot achieve BTC-to-BRC20 swaps because the BTC standard does not comply with the BRC20 standard.
BTC Data Structure Not Suitable for Trading and Smart Contracts: Completely mimicking the BTC data structure can ensure security, but it is not the optimal choice because the BTC data structure is not very friendly to trading and smart contracts.
Deviation in Actual Confirmation Speed Despite Fast Testnet Speed: Although the testnet speed is fast, the current confirmation speed of the BTC mainnet is about 10 minutes, or even longer, which limits the speed. Unless there are innovative mechanisms in future product updates, the speed issue is difficult to improve.
3.4 Competitor Analysis:
3.4.1 Runes:
The solution of "Runes" utilizes two key mechanisms of the Bitcoin blockchain: the UTXO (Unspent Transaction Output) transaction model and the OP_RETURN opcode.
In the UTXO transaction model, each transaction generates outputs that act as different units of cryptocurrency. To initiate a new transaction, these outputs will be used as inputs. This model allows for precise tracking of each cryptocurrency unit. For Bitcoin runes, each UTXO can contain different quantities or types of runes, making token management easier.
The OPRETURN opcode allows users to embed additional information in Bitcoin transactions. This opcode supports including up to 80 bytes of unusable extra data in transactions. "Runes+UTXO" uses the OPRETURN opcode to store token data, including the token's name, ID, symbol, specific operation commands, and other basic information. This data is stored in so-called runestones, using the OP_RETURN field of Bitcoin transactions.
In the deployment process of tokens, a new inscription is created each time a BRC-20 token is deployed, minted, or transferred. Additionally, each token is stored in a separate UTXO. The protocol does not specify how to include multiple tokens in a single UTXO, leading to UTXO inflation.
Runes simplifies this process. First, it no longer uses BRC20, but instead stores data in the OP_RETURN field. Secondly, it allows users to hold multiple types of tokens, including Bitcoin, in the same UTXO, making transfers more efficient and reducing UTXO inflation. Third, Runes is 100% based on UTXO, which means it can be more easily integrated into RGB or Lightning.
3.4.2 RGB++ Layer:
The RGB++ Layer achieves 1:1 interaction between Bitcoin and Turing-complete UTXO chains (such as CKB) through isomorphic binding, simplifying off-chain verification, improving user experience, and supporting multi-chain interoperability and BTCFi applications such as UTXOSwap and IBO platform.
Fractal Bitcoin enhances blockchain scalability and provides infinite computing power and fast block confirmation through virtualizing the Bitcoin core and creating recursive BCSP instances, supporting applications such as Ordinals instances and virtual worlds, while maintaining the consensus mechanism and engineering structure of Bitcoin.
Architecture: RGB++ Layer achieves cross-chain interoperability through isomorphic binding and bridgeless cross-chain, while Fractal Bitcoin achieves multi-level computing and storage expansion through virtualizing recursive Bitcoin core.
Consensus Mechanism: RGB++ Layer relies on the joint consensus of Bitcoin and UTXO chains, while Fractal Bitcoin maintains consistent consensus with the Bitcoin main chain, enhancing robustness through recursive instances.
User Experience: RGB++ Layer simplifies the user experience, reduces the complexity of off-chain verification, while Fractal Bitcoin enhances user experience and transaction efficiency through virtualization and fast confirmation.
RGB++ Layer focuses on cross-chain interoperability and user experience optimization, suitable for BTCFi and asset liquidity aggregation, while Fractal Bitcoin achieves infinite scalability and multi-level computing through virtualization, suitable for applications with complex computing and storage needs, each with its own advantages.
IV. Conclusion
In summary, when facing challenges in scalability and transaction efficiency, innovative solutions such as RGN++ and Fractal Bitcoin have emerged in the Bitcoin network. UniSat has provided users with a more flexible trading mechanism and greater network processing capacity through the standardization of brc20-swap and the introduction of Fractal Bitcoin. By empowering the BRC-20 ecosystem with the application attributes of using SATS as Gas fees and the meme attributes of Pizza, UniSat has attracted a large number of users. Although Fractal Bitcoin has certain limitations in structure and implementation, its potential for infinite scalability and multi-level computing architecture demonstrates the future direction of the Bitcoin network. In comparison with competitors such as Runes and RGB++ Layer, Fractal Bitcoin demonstrates its unique technical characteristics through virtualized recursive expansion and consensus consistency, but currently, theoretically, it does not appear to be more effective than Runes and RGB++. We hope that there will be more innovative mechanisms when the product is officially launched.
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