Author: Nora / Mat / Darl /WolfDAO

Editing and Proofreading: Punko

Preface

Since September, with the community sentiment caused by Fractal, the market's focus has returned to the entire Bitcoin ecosystem. Especially with the large number of users participating in the assets and gameplay launched by Fractal, it has ultimately led to high gas fees on the chain. The wave of enthusiasm caused by Fractal is first related to the overall sluggish market and lack of fresh narratives. Secondly, based on the generous airdrop of Pizza by Unisat, many users clearly valued the launch of Fractal, resulting in extreme participation during the testnet phase. Roughly estimated, over ten million addresses participated in the corresponding testnet tasks to vie for airdrop rewards. Lastly, the high returns brought by asset protocols like Cat20 have continuously fueled the money-making effect, leading to the increasing popularity of Fractal.

In addition, Unisat's official hunger marketing has also contributed to the fire, as the originally small circulating supply of FB airdrop has soared in price due to the fierce competition on the entire chain, becoming a significant gold shovel and indirectly accelerating the development of Fractal.

For the above reasons, it is essential to analyze Fractal.

Fractal Overview: Bitcoin's Native Scalability Solution

Fractal Bitcoin is a scalability solution that recursively extends an infinite number of layers on top of the BitcoinCore code itself. It is designed as a second-layer network or sidechain of Bitcoin, a native extension of the Bitcoin first-layer network that aims to improve transaction efficiency by accelerating block times and increasing block capacity while maintaining orthodoxy. Its working principle includes full compatibility with the Bitcoin mainnet (users can transact on the Fractal Bitcoin network, and these transactions can subsequently 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 extension solution, Fractal can facilitate secure asset transfers across various layers starting from the Bitcoin main chain. Assets such as Bitcoin and BRC-20 and Ordinals can be bridged through a decentralized bridge. The underlying mechanism features a rotation MPC signature mechanism with dynamic replacement, taking into account specific aspects of the BRC-20 standard.

Functionally, Fractal is more like a Bitcoin testnet, supporting features that have not yet been activated on the mainnet, similar to a test field, providing better user experience and performance optimization, making it ideal for complex applications to experiment and innovate as much as possible. It also allows users to participate and provide real feedback in a real interactive environment, similar to the significance of EVM layer2 for Ethereum.

Fractal Scalability Native Solution Source: @10xWolfDAO Compilation

Investment and Financing: Development Momentum Under Strong Collaboration

The Fractal Bitcoin network is developed in collaboration with UniSat and Block Space Force. Unisat, as the main developer and promoter, is a leading Bitcoin wallet with over 900,000 active users per week. It has received five rounds of undisclosed financing, with two rounds led by OKX and Binance respectively, and 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, investing in projects with 100x returns, and developing the most widely used blockchain applications globally. Overall, the resources of the two project parties relatively favor Unisat, which has attracted a considerable number of loyal users through its successful brand architecture and the generous Pizza airdrop, making Fractal undoubtedly the best endorsement for Fractal.

Under the resources of the two project parties, Fractal has 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 from OKX and UniSat wallets and various developer resource support programs, demonstrating Fractal's ambition for its ecosystem development.

"Fractal" OR "Fractals"

In Chinese translation, "Fractal" is often confused with "Fractals." Of course, in terms of literal understanding, the meaning itself remains unchanged. However, if one must pursue correctness, "Fractal" is a better explanation. Fractal is a mathematical concept used to describe complex geometric shapes with self-similar features. Fractal shapes appear similar at different scales, emphasizing self-similarity and recursive nature. Using "Fractal" also demonstrates the high consistency of Fractal with the Bitcoin mainnet.

In the official introduction, Fractal is described as having a self-similar recursive property. Bitcoin's extension requires each layer to have the essence of a fractal: maintaining consistency across all levels, expanding as many levels as needed, and logically sequencing. Essentially, this is the fractal nature of Bitcoin.

Fractal Highlights: Demonstrating Advantages

The highlight of Fractal itself is its performance optimization and improvement based on the Bitcoin mainnet, as well as the introduction of related asset issuance methods and ecosystem applications. It can be vividly said that Fractal is like new wine in old bottles, using the resources of the Bitcoin mainnet to introduce a new asset issuance method. Specifically:

Fractal Bitcoin Highlights Summary Source: @10xWolfDAO Compilation

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

Implementation Path: Multi-Layer Expansion, Mining Mechanism, and OP_CAT

Multi-Layer Expansion Mechanism

Fractal improves Bitcoin transaction speed by recursively expanding layers, establishing multiple levels of expansion layers on the Bitcoin main chain, forming a tree-like structure. This design allows each layer to further fork, increasing the network's parallel processing capabilities. Each layer can independently process transactions and dynamically adjust the number of layers as needed. During peak transaction periods, it can quickly increase the number of layers to handle more transactions, allowing the network to flexibly handle various loads.

Just as other L2 and sidechains are like building an additional high-speed highway, Fractal can build countless high-speed highways parallel to the Bitcoin mainnet. Each highway can be used to expand the Bitcoin mainnet or to extend another road. Each has its unique value orientation, allowing users to solve congestion issues without changing transportation methods.

Fractal's Mechanism of Running Multi-Layer Expansion Source: @10xWolfDAO Compilation

Cadence Mining

Fractal adopts the same PoW consensus mechanism as Bitcoin, which means BTC miners can seamlessly switch to Fractal block mining using existing ASICs, GPUs, and other hardware, effectively increasing efficiency and adding additional economic benefits for Bitcoin miners.

At the same time, Fractal's mining method is divided into permissionless and merged mining, with two blocks generated through permissionless mining and one through merged mining for every three blocks. Permissionless mining allows anyone with suitable tools to mine Fractal blocks, and anyone can participate in the network by downloading the software and running a node. Merged mining is specifically for BTC miners, allowing them to mine BTC blocks and Fractal blocks simultaneously without requiring additional computing power.

OP_CAT

OP_CAT is an opcode in the Bitcoin script language originally used to concatenate two elements into a string. However, it was removed by Satoshi Nakamoto in 2010 due to security and memory usage concerns, as it could lead to excessive memory usage in scripts, creating very large stack values from small inputs. Its benefit lies in the ability to write scripts necessary to build more complex and trustless Bitcoin infrastructure, which is crucial 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 more.

Fractal Token Economics

The Fractal Bitcoin mainnet mainly consumes two tokens, $FB and $SATS, with the former serving as general gas and the latter as exclusive gas for pizzaswap.

The total supply is 210 million tokens, and after the mainnet launch, only tokens produced through mining can circulate, with other tokens subject to lock-up mechanisms, including a six-month lock-up for private placements.

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

Estimated Proof of Work Mining Schedule:

• 15% - Ecosystem Treasury, used for investing in and supporting projects in the Fractal ecosystem. Within 10 years, a maximum of 10% of the total pool can be used each year.
• 15% - Core Contributors, building and maintaining the core software of Fractal. All tokens are locked for 7 months and released linearly until 12 months.
• 10% - Community Subsidies, establishing partnerships and liquidity plans. Within 10 years, a maximum of 10% of the total pool can be used each year.
• 5% - Presale, for early investors and network participants. All tokens are locked for 7 months and released linearly until 12 months.
• 5% - Advisors, providing strategic advice and support for the project. Within 5 years, a maximum of 20% of the total pool can be used each year.

Fractal Allocation Plan Source: @10xWolfDAO Compilation

Currently, the official position has not explicitly stated whether users participating in the testnet will receive airdrop rewards. If so, it may be allocated from the community subsidies or the ecosystem treasury. Although it is unlikely that the 5% for advisors, 10% for community subsidies, and 15% for the ecosystem treasury will be used by the team to manipulate the market, aside from the 5% for investors, the remaining 50% for mining will have a time cost, and the remaining 45% is still under the control of the official team, which may pose a risk.

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

• Ecosystem Treasury (15%): bc1pukzhdkdghqajp3zvwkx65e7uv5zma6lzalet4xauf3p5c0vdg8wqk2avv6
• Community Subsidies (10%): bc1pdrqk5xv3tfpmdsuegnt5a63xucf475r3l0vqg6zulwmtzezg7h6sd2pqx3
• Presale (5%): bc1put2rhzx0cwz552epm25dt2rexg2tzx9sws2sjcezsjm9y7h7ct8svhpzf2
• Advisors (5%): bc1pm2h0420vmgayhzs59d5nf0mzjlf3q6vrnlpqytefe3rk6a8ku3zq59walm
• Core Contributors (15%): bc1ppvqe8ugt27kgw4trvnzjvcfzn52702tq2ahe7cgzw0jsv67vrhysvgnndz

Fractal Ecosystem Overview

CAT 20

The most popular ecosystem protocol currently launched by CAT Protocol is the CAT20 protocol, released in the early hours of September 11, with a quantity of 21 million. The code shows traces of development by Chinese individuals, and specific information about the project party has not been disclosed. Although the code and unclear information about the project party may pose rug risks, driven by community sentiment and the spread by major KOLs, a large number of users rushed into minting, causing the Fractal chain's gas fees to soar, reaching close to 7000 at its peak. The high level of enthusiasm led to the official token FB being speculated to a price of 40U, indicating the high FOMO level for the CAT20 protocol in the entire crypto community. Ironically, the founder of Motoswap, Danny Plainvie, CAT Protocol, and the Quantum Cat team staged a drama of truth and falsehood regarding the CAT20 protocol, with each party holding its own position, which precisely proves the protocol's popularity.

Comparing the CAT protocol with existing Bitcoin protocols, its main innovation is the use of the OP_CAT opcode, which perfectly adapts to the Fractal ecosystem. Its modular and programmable nature provides flexible and combinable rules for complex decentralized applications such as AMM, lending, and staking. Another prominent feature is that its transactions are fully verified by miners and reduce reliance 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 inconsistent or manipulated indexers.

At the time of writing, UniSat has indicated that the CAT20 trading market is under research, and official resource support is on the way. However, the official X account of the CAT20 protocol has been suddenly frozen, seemingly adding uncertainty. As the protocol is still in its early stages, there are still many issues regarding its feasibility that need further attention and monitoring of specific plans and performance.

BTCTerminal

BtcTerminal is a relatively popular project in terms of Twitter followers and KOL attention. It initially served as an infrastructure provider for the Runes protocol, offering products such as the Runes browser, Runes trading market, and Runes encyclopedia. It later decided to rebrand the original Runes project as BtcTerminal and integrate it into the Fractal Bitcoin ecosystem. The related Runes will continue to be supported after the name change, with a new focus on the broader Bitcoin ecosystem. The project has currently launched a comprehensive trading market for the Fractal Bitcoin ecosystem, allowing users to query Mint progress, wallet balances, and will also support the upcoming Cat721. The official team recently launched a mining pool activity, allowing the rental of ASIC mining power to participate in $FB mining, with a total limit of $50,000. However, specific risks and returns need to be considered comprehensively.

UniWorlds

UniWorlds is a metaverse project built on Fractal, creating an immersive environment on Fractal and developing a community and game toolkit for interconnected virtual worlds. It will launch a BTC ecosystem game creation platform. UniWorlds is also the first large-scale application on Fractal developed by the UniSat team. It announced the completion of a seed round investment led by UniSat and UGC platform manufacturers on August 8. It can be said that Uniworlds is indeed a project with explicit official resource support, and further observation can be made as the ecosystem develops.

BRC20

After the activation of BRC20 functionality in block 21000, the on-chain gas has indeed been maintained at a high level for a long time, to some extent attracting the popularity of Cat20. However, in terms of trading volume and market value, the leading runic projects have not performed well, and there is a general presence of startup plates or studio packages. Whether there will be projects that stand out in the future or continue to remain dormant, all of these need to be tested by the market.

Considerations for Different Participant Groups: Retail Investors, Miners, and VC Perspectives

Retail Investors' Perspective

The new narratives and high heat brought by Fractal's asset protocols or on-chain casinos will attract some on-chain retail investors who hold the mindset of not wanting to miss out even if it means losing money. They will actively participate in the minting and price speculation of new assets. The main driving force behind this is the community, guiding the narrative with its power. With 50% of the time cost for POW output, retail investors can gain a significant number of chips in the short term, making it perhaps the best time to profit.

Miners' Perspective

Bitcoin mainnet miners can mine BTC and produce $FB. If the entire Fractal ecosystem continues to develop positively and applications consuming $FB continue to emerge, miners can push the price of $FB up to gain more profits when the output of $FB is less than its consumption. Conversely, if the ecosystem is stagnant, the value of $FB will decline over time. After the actual listing, when the value of $FB is estimated to be about right, it may be the best time for miners to sell, posing risks for retail investors as well.

Representatives of VC and Other Resource Providers

For example, OKX Wallet has launched a runic trading market. Whether first-tier exchanges will list $FB or control the trend of the entire Fractal ecosystem through resources and institutional strength is a question worth exploring. The entry of large capital may have a positive impact on ecosystem development, but it will be mainly led by institutional market makers, weakening the voice of retail investors, and primarily serving the interests of VC institutions.

Conclusion: The Road to Development with Insufficient Innovation

From the current perspective, Fractal itself does not have many innovative points, mainly focusing on compatibility with and optimization of the mainnet. The ecosystem is still in the early stages of development, and the success of new projects and who will ultimately emerge as leaders are unknowns. More answers will require time and market validation.

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