Fractal Bitcoin is a recently launched project that bills itself as “the only native scaling solution completely and instantly compatible with Bitcoin. In essence it is a merge mined system portraying itself as a second layer sidechain for Bitcoin, where multiple levels of “sidechains” can be stacked on top of each other. So think of a sidechain of the mainchain, a sidechain of the sidechain, a sidechain of the sidechain of the sidechain, etc. It is not.
Shitcoins Are Not Second Layers
Firstly, the entire system is built around a new native token, Fractal Bitcoin, that is issued completely independent of Bitcoin. It even comes with a massive pre-mine of 50% of the supply being split between an “ecosystem treasury”, a pre-sale, advisors, grants for the community, and developers. This is essentially the equivalent of the entire first halving period of Bitcoin when the block subsidy was 50 BTC per block. From here the network jumps to 25 Fractal Bitcoin (FB) per block.
Secondly, there is no peg mechanism for moving actual bitcoin into the “sidechain.” Yes, you read that correctly. They are framing themselves as a sidechain/layer two, but there is no actual mechanism to move your bitcoin back and forth between the mainchain and “the sidechain” Fractal Bitcoin. It is a completely independent system with no actual ability to move funds back and forth. One of the core aspects of a sidechain is the ability to peg, or “lock,” your bitcoin from the mainchain and move it into a sidechain system so that you can make use of it there, eventually moving those funds back to the mainchain.
Fractal Bitcoin has no such mechanism, and not only that, the discussion around the topic in their “technical litepaper” is completely incoherent. They discuss Discreet Log Contracts (DLCs) as a mechanism for “bridging” between different levels of Fractal sidechains. DLCs are not a suitable mechanism for a peg at all. DLCs function by pre-defining where coins will be sent based on a signature from an oracle or a set of oracles expected at a given time. They are used for gambling, financial products such as derivatives, etc. between two parties. DLCs are not designed to allow funds to be sent to any arbitrary place based on the outcome of the contract, they are designed to allocate funds to one of two participants, or proportionally to each participant, based on the outcome of some contract or event that an oracle signs off on.
This is not suitable for a sidechain or other system peg, which is ideally architected to allow any current owner of coins in the sidechain or second layer system to freely send coins to any destination they choose so long as they have valid control over them on the other system. So not only is there no functional peg mechanism for the live system, but their hand waving about potential designs for one in their litepaper is just completely incoherent.
The whole “design” is a clown show designed to pump bags for pre-mine…
Read More: Fractal Bitcoin: A Misleading Affinity