The new CAT protocol on Bitcoin

The new Covenant Attested Token (CAT) protocol is based on Bitcoin's UTXO, and it is used to create tokens.

Taproot Wizards co-founder Udi Wertheimer has proposed launching new CATNIP tokens, based on OP_CAT.

Runes were a mistake… but OP_CAT fixes this!

Introducing CATNIP: Bitcoin-native CAT-powered tokens.

Most crypto enthusiasts have been left disappointed by the user experience of BRC-20s and Runes. While Ordinals and Inscriptions are largely considered to be a superior version of NFTs on Bitcoin, they both rely on third-party off-chain indicators to function, which introduces the risk of indicator inconsistency.

In contrast, the Covenant Attested Token (CAT) protocol is validated by miners and uses smart contract covenants to handle the minting and transactions of tokens. It is implemented exclusively by Bitcoin Script on Bitcoin’s Layer-1, inheriting Bitcoin’s native Proof of Work security.

notably, CAT tokens can be verified in Script, and most importantly, they can also be used in other smart contracts and in more complex and interconnected decentralized applications, such as DEXs based on AMM (Automated Market Makers), lending, and staking.

Furthermore, the CAT protocol enables the trustless bridging of assets between different blockchains, allowing dApps to operate on multiple chains.

With the new CAT protocol, it is possible to create both classic fungible tokens, with the CAT20 standard, and non-fungible tokens (NFTs) with the CAT721 standard.

For the new CAT protocol to actually start being used on Bitcoin, OP_CAT must be reactivated.

OP_CAT was originally an opcode in Bitcoin that was disabled in 2010. Over the years, however, it has been proposed several times to reactivate it with a soft fork.

Its main use is to allow the data provided by the creator of a script to be concatenated with the data provided by someone else who spends from that script.

Hence, in its current state, the CAT protocol cannot yet be used on Bitcoin’s Layer-1 (its public blockchain), but Wertheimer’s proposal is not the only one that asks to reactivate OP_CAT.

Specifically, Wertheimer proposed the CATNIP protocol to create tokens, stating that the protocol currently used to create and trade tokens on the Bitcoin blockchain, Rune, is a mistake, and that OP_CAT solves the problem.

He says that the user experience with the BRC-20 protocol and Rune has been disappointing for most cryptocurrency enthusiasts, and that the source of the frustration is a fundamental problem with these protocols, which is that Bitcoin consensus (the nodes and miners) is unaware of their existence.

All this leads to having to overcome cumbersome steps to exchange BTC for Rune or vice versa.

CATNIP solves this problem, thanks to the recursive covenants OP_CAT that already enables the Purrfect Vault. This would allow the creation of true native tokens on Bitcoin, usable within the Bitcoin Script. No other protocol for creating tokens on Bitcoin can currently do this.

The idea is that, when (and if) OP_CAT is reactivated on the Bitcoin mainnet, CATNIP will be especially useful for stablecoins.

The new CAT protocol is already monopolizing the Fractal network.

In particular, Fractal claims to be the only scaling solution for Bitcoin that uses Bitcoin Core’s own code to scale recursively thanks to unlimited layers.

The mainnet went live just a few days ago, and it has a partnership with OKX Wallet.

They are also working on a voting platform that will use OP_CAT, thus giving Fractal holders the possibility to vote on proposals.

It should be noted, however, that Fractal is not Bitcoin, but a crypto project based on the Bitcoin blockchain.

So, as for the OP_CAT function, it has not yet been reactivated on Bitcoin, after being disabled in 2010, but on Fractal, for example, it is already available.

The Bitcoin community will have to decide whether to re-add it, and to do so a soft fork similar in some ways to the one that introduced Taproot a few years ago will be needed.

If it is re-added, it will be possible to start using the CAT protocol also on Bitcoin’s Layer-1.

Thanks to the new CAT protocol, it will be possible, for example, to create tokens with CATNIP, or other similar protocols.

It will be possible to create both normal fungible tokens CAT-20 and NFTs in CAT-721 format.

Currently, it is not possible to create tokens using native Bitcoin functions, so both creating and using them involves cumbersome processes and has limited potential.

With protocols like CATNIP, even the Bitcoin blockchain will be able to allow the creation and transfer of tokens with native functions, making everything simpler and with much greater potential.

For example, one could create real DEXs on Bitcoin to allow the direct exchange of BTC into a stablecoin and vice