Fractal Ships Bitcoin Sidechain But Faces Pre-Mine Controversy

Fractal Bitcoin has joined the race to scale Bitcoin.

On Sept. 9, Fractal Bitcoin announcedits first block had been mined, ushering the sidechain’s mainnet launch. The project notably aims to bolster Bitcoin’s scalability by using the Bitcoin Core codebase, differentiating it from rival Bitcoin scaling solutions.

While transactions executed on the Bitcoin Layer 1 take roughly 10 minutes to confirm, Fractal claims block confirmation times of less than 30 seconds and a 20-fold throughput increase.

“The launch of Fractal on the mainnet is a pivotal moment for the Bitcoin ecosystem,” said Lorenzo, director of UniSat and a core contributor to Fractal. “It provides a robust platform for developers to experiment, innovate, and build native solutions on Bitcoin without relying on foreign constructs.”

Fractal said it achieves scalability gains through a technique called “recursive layering,” allowing the creation of multiple independent layers on the top of Bitcoin that are each capable of scaling Bitcoin’s Layer 1 by 20 times.

Fractal attracted 1.5 million unique addresses and hosted 13.6 million transactions since launching its testnet in July. The network currently boasts a hashrate of 11.23 exahashes per second — equating to 1.9% of Bitcoin's total hashrate, according to UniSat.

Fractal Bitcoin is led by UniSat, a Bitcoin wallet provider, and Block Space Force, a web3 investment firm.

Pre-mine controversy

Fractal’s native token, FB, also went live on Sept. 9. Half of the tokens were pre-mined, including allocations of 15% to core contributors, 15% to its ecosystem treasury, 10% to community grants, 5% to advisors, and 5% to pre-sale investors. The remaining 50% of tokens are earmarked as rewards for Proof of Work miners.

Fractal uses a hybrid merge-mining mechanism called Cadence Mining. Every third Fractal block is merge-mined with Bitcoin, with the other two being mined natively. The merge-mined blocks allow Bitcoin miners to participate in securing Fractal.

Token emissions are subject to a two-year halving cycle, with 52.5 million tokens set for release during the first two years at a rate of 25 FB per block. Fractal plans to introduce an FB-based tokenized governance mechanism in the future.

However, Fractal Bitcoin is facing criticism for its pre-mining practices, with Mononautical, a Bitcoin developer, flagging that the pre-mined tokens are immediately spendable and place excessive control over the token’s supply in the hands of insiders.

"If everything goes to plan, it'll take miners two whole years (an entire fractal halving era) to eke out half of what the founders awarded themselves on day one," Mononautical tweeted.

Mononautical also described Fractal as a “hastily cloned copy” of the Bitcoin Core v24.0.1 codebase, with the addition of a few consensus tweaks and “some code ripped off” from Namecoin and Bitcoin Cash. “As far as I can tell, it's just another shitfork,” they said.

Fractal did not immediately respond to The Defiant’s request for comment.

OP_CAT smart contracts

Fractal also introduced support for OP_CAT, a controversial opcode enabling smart contract functionality on Bitcoin that was disabled by Satoshi Nakamoto, Bitcoin’s pseudonymous founder, in 2010.

While Nakamoto expressed concerns regarding potential attack vectors targeting the opcode, Ethan Heilman, one of OP_CAT’s co-authors, put out an open call for developers to identify any vulnerabilities in 2019. Heilman did not receive any responses.

Armin Sabouri, the CTO of Botanix Labs, a Bitcoin Layer 2, proposed reimplementing the opcode to Bitcoin’s codebase in June.

By contrast, most rival Bitcoin scaling solutions have opted to introduce support for smart contracts by supporting the Ethereum Virtual Machine and Ethereum’s Solidity programming language.

More than 100 projects have announced plans to launch on Fractal. Fractal launched a grants program to fund developers who want to build new applications on their platform, with a focus on DeFi, gaming, and NFTs.

Fractal is also launching the PizzaSwap decentralized exchange on the network, and plans to support existing Bitcoin token standards, including BRC-20, Runes, and Ordinals.

Bitcoin's growing scaling solutions ecosystem

Fractal is looking to compete among a growing cohort of Bitcoin Layer 2 networks and sidechains.

Core recently emerged as the sector’s largest network with a Total Value Locked (TVL) of $304 million. Core’s growth has been propelled by the recent launch of Pell Network, a Bitcoin staking protocol, driving a 120% increase in TVL over the past 30 days, according to DeFi Llama.

Bitlayer comes in second with a $278.4 million TVL despite a 24% dip over the same period, while Stacks ranks third with $171.3 million, followed by Rootstock with $148.2 million.