Fractal Bitcoin: a breakthrough sidechain or just another altcoin?

At one time, the bitcoin hard forks Bitcoin Cash and Bitcoin SV made the “splitting” of the original cryptocurrency’s network one of the community’s hottest topics. The hype has since passed, and the creators of those blockchains, Roger Ver and Craig Wright, are remembered mainly for their legal troubles.  

Crypto history is cyclical, and in 2024 scaling bitcoin is back on the agenda. Oleg Cash Coin examines whether the latest approaches differ from their predecessors through the lens of Fractal Bitcoin.

What is Fractal Bitcoin

As crypto has grown and its user base has expanded, trends have emerged: meme coins, mini-apps in Telegram, retrodrops and second-layer (L2) solutions built atop a major project — bitcoin or Ethereum. Typically, each rides the network effects of a handful of flagships that cracked the top ranks on CoinMarketCap.

The market’s rapid expansion has left many newcomers unable to distinguish original ideas from copy-paste. Fractal Bitcoin exemplifies how to assemble a new blockchain project out of old fads.

Various sources describe the network as a sidechain or an L2 built on bitcoin. One of its headline features is a mechanism touted as Cadence Mining.

In essence, bitcoin miners can mine every third block in Fractal Bitcoin, earning a reward only for that one. The remaining two blocks go to “fractal” miners.

The project immediately received backing from Antpool. The pool is a subsidiary of Bitmain, one of the largest manufacturers of hardware for mining the first cryptocurrency. Both organisations are known for promoting Bitcoin Cash and other initiatives aimed, if not against “digital gold”, then at maximising profit, and do nothing to expand bitcoin’s ecosystem.

Fractal is backed by the team behind the Unisat wallet, which has ties to the development of Bitcoin SV from the “pseudo‑Satoshi” Craig Wright. Journalist Colin Wu reported this in 2023. 

Merged mining is hardly new. Dogecoin adopted the Auxiliary Proof‑of‑Work (AuxPoW) algorithm in 2014. Litecoin founder Charlie Lee proposed the mechanism to improve both networks’ resilience to 51% attacks. By July 2019, nearly 90% of Dogecoin’s total hashrate was accounted for by the largest Litecoin pools.

Originally applied to Proof‑of‑Work networks, these ideas have since evolved into Proof‑of‑Stake restaking protocols such as EigenLayer. In both cases, validators and miners simultaneously deploy the same resources across different projects or networks.

Fractal is just a fork

The project’s site states that the developers use the code of bitcoin’s reference client — Bitcoin Core. That has allowed the team to claim that Fractal is “fully compatible with bitcoin’s ecosystem and infrastructure”. 

At the same time, Fractal targets support for BRC‑20 token formats, opening the door to DEX, DeFi, stablecoins and other areas.

Calling the network a bitcoin sidechain is inaccurate. Fractal Bitcoin is an ordinary fork—one of the hundreds, if not thousands, since the launch of the leading cryptocurrency.

Forks take ready‑made code from a working project, tweak parameters to their needs and launch a separate network. Such a project does not expand bitcoin’s ecosystem; it merely taps its liquidity.

Until roughly 2018, the main source of that liquidity was the hard fork — splitting a network, as with Bitcoin Cash. Since then the narrative has lost steam: CoinGecko lists only four projects in this category with a combined capitalisation of $7.8bn.

Tokenomics

Fractal’s tokens are called FB and the supply is capped at 210 million. The premine is 50%, and only the remainder will be available for mining. A small portion is earmarked for a drop to early users of Unisat products.

The tokenomics are opaque and include the standard allocation buckets: treasury, early investors and advisers, grants and developers. 

A small amount of FB will likely reach the market via an airdrop. The site presents two main retrodrop programmes called Fractal Mainnet Bootstrap from the Unisat team and the OKX exchange.

These programmes are allotted 1,000,000 FB — 0.47% of the maximum token count, or 0.95% of the premine of 105,000,000 FB. The remaining 49% stayed with the project team.

Conclusions

Technically, the project is not a bitcoin L2 and does not use it for consensus or as fuel to pay for transactions. 

Contrary to the developers’ claims, it scales digital gold in the same way Ethereum does: you can create a wrapped BTC there and call it an improvement to the first cryptocurrency’s functionality.

Setting aside the project’s technical side and its market prospects, Fractal Bitcoin relies on old narratives to attract users: in essence it is no different from many other altcoins.