BVM Research Issue #1 CAT20 – The beginning of OP_CAT smart contracts We're excited to share our research on CAT20, coinciding with the launch of the $CAT DEX (cat.fun/trade) today. BVM Research is a new group with the BVM team, consisting of researchers and engineers exploring cutting-edge crypto protocols and solutions. OVERVIEW - Fractal @fractal_bitcoin is a PoW Bitcoin sidechain gaining adoption with hundreds of thousands of users and an impressive 26 EH/s hash rate. - CAT20 @ProtocolCAT is a token standard on Fractal using OP_CAT. - We believe CAT20 has a superior token standard design compared to BRC20 or Runes. - This could open up new opportunities to build more sophisticated OP_CAT smart contracts and OP_CAT applications on Fractal first and then on Bitcoin later. TRACTION - 2,000 CAT20 tokens created within the first week - 35,000 CAT20 holders - 5,000,000 CAT20 transactions PRODUCT - All CAT20 operations (like deploy, mint, and send) are directly validated by Fractal miners. Fractal miners are some of the biggest miners in the world, such as @f2pool, @SpiderPool_com, and @MaxiPoolHosting. - While CAT20 still needs a tracker to keep track of CAT20 token balances in wallets, the key is that these operations are verified by Fractal’s consensus, not external indexers, while BRC20 and Runes rely on external indexers. - The CAT protocol makes this magic happen by using a mechanism called recursive covenants. - Recursive convenents let the sender of a Fractal transaction set conditions on how the receiver can spend the UTXOs. These rules don’t just apply to the next intermediate transaction; they stick around for all future transactions that spend those UTXOs. - It also introduces a state that can be maintained and updated across multiple transactions. So, when a transaction spends a UTXO with a stateful contract, the state gets updated, and the new state is saved in the output of the spending transaction. - It’s all enforced by recursive covenants. Think of it like smart contracts on Ethereum. - The smart contract makes sure that spending transactions meet with the recursive covenant condition: the script of the output is the same as the script of the input—in other words, the transaction has to be spent to the CAT protocol script - The contract also ensures that spending transactions meet the state transition condition: another output holds the state, which has to follow the state transition rule (e.g., checking the correctness of new state values like token ID, token amount, owner public key, etc) defined in the script. - These conditions are enforceable on Fractal, thanks to the reactivation of OP_CAT, which allows the contract to access both the spending transaction’s input/output scripts and amounts and the previous transaction’s data. CONCLUSION All CAT20 protocol operations are verified by Fractal miners, not external indexers. This eliminates the risk of indexer inconsistency, which you might encounter with BRC20 or Runes. CAT20 shows that OP_CAT has the potential to open up new opportunities for building more complex protocols and applications on Fractal and Bitcoin. At BVM, we couldn't be more excited to continue researching and building with CAT20, Fractal, and OP_CAT in the coming months.