February 2025 Public Chain Industry Research Report: Challenges and Innovations in Market Adjustment

In February 2025, the blockchain market experienced a significant adjustment, posing challenges to both mature networks and emerging public chains. Bitcoin performed relatively steadily, further strengthening its dominant position, while most chains, including Solana, Avalanche, and Ethereum, saw substantial declines. Nevertheless, development activity in the public chain sector did not come to a halt: the launch of the Berachain mainnet, the upgrade of Base infrastructure, and the introduction of Uniswap's Layer 2 solution became highlights of the month.

Market Overview

The market experienced a significant pullback in February: Bitcoin fell from $98,768 to $84,177, a drop of 14.8%, while Ethereum saw an even larger decline, dropping from $3,065 to $2,216, a decrease of 27.7%. In the last week of the month, as security concerns spread, selling pressure intensified.

This pullback closely follows the bull market in January, but the market signals are complex, with investors wavering between optimistic sentiments and concerns triggered by safety risks. Market sentiment has deteriorated, and risk appetite has declined, especially in more speculative areas. Globally, the North American market exhibits cautious optimism due to policy changes, while the Asia-Pacific market has felt the impact of safety incidents more acutely.

Regulation and Policy Changes

The U.S. government's cryptocurrency executive order focuses on self-custody and the development of stablecoins, providing rare policy clarity for the industry. However, the hacking incident on February 21, which resulted in losses of up to $1.5 billion from a certain trading platform, set a record for the largest loss in the history of cryptocurrency, triggering new security concerns and rapidly changing market sentiment. Meanwhile, the SEC's stance has softened, pausing investigations into several well-known companies and dropping the appeal against the 'Dealer Rules.' The bipartisan GENIUS Act (the U.S. Stablecoin Innovation and Financial Inclusion Act) further reinforces the regulatory framework for stablecoins, indicating a friendly trend in the U.S. regulatory environment.

Investor behavior reflects this turmoil. The speculative frenzy driven by tokens related to Argentine President Milei quickly cooled due to negative news, leading to a sharp decline in valuations and a significant drop in trading volume. This shift suggests that the market is retreating from high-risk assets.

Layer 1

Layer 1 public chains are generally under pressure, with a total market capitalization decline of 20.8% to $2.3 trillion. Bitcoin's dominance has risen from 71.3% to 74.2%, while Ethereum's share has shrunk from 14.0% to 11.9%. BNB Chain's share has slightly increased to 3.7%, but Solana's share has dropped from 4.0% to 3.3% after a price collapse of 36.3%.

Litecoin rises against the trend, up 1.0% to $128.7, while Solana (-36.3%), Avalanche (-35.7%), and others lag behind.

The total value locked (TVL) in DeFi has decreased by 20.0% to $82.9 billion, with Ethereum at $44.9 billion (down 21.7%) and Solana at $8.6 billion (down 34.1%).

Berachain has emerged rapidly, jumping to sixth place soon after its mainnet launch on February 6, with a TVL of $3.2 billion. The chain issued 80 million BERA tokens and adopts a "Proof of Liquidity" model—an innovative staking method that transforms liquidity into network security. Following a $100 million funding round in 2024, this month's airdrop and governance rights have stimulated market enthusiasm. Unlike traditional proof of stake, this approach may redefine how public chains balance growth and stability, making Berachain a project worth watching.

The speculative frenzy around Solana has clearly cooled down. High-profile failures, such as the token associated with Argentine President Milei, have damaged market confidence, leading to a significant decline in trading volumes across several decentralized exchanges. While these types of tokens are unlikely to disappear and can be viewed as digital collectible cards, their peak frenzy may have passed, and traders are beginning to focus more on fundamentals rather than speculation.

Bitcoin Layer 2 and Sidechains

The TVL of Bitcoin L2 and sidechains has decreased by 24.5% from $2.7 billion to $2.1 billion. Core leads with a TVL of $460 million (a decrease of 42.0%), followed by Bitlayer ($350 million) and BSquared ($320 million). BOB performed well, only dropping by 7.9% to $220 million.

On medium-sized platforms, Merlin performed relatively well, with TVL decreasing slightly by 9.3% to $150 million. Smaller platforms, however, faced greater pressure, with SatoshiVM down 31.5%, MAP Protocol down 29.6%, and Interlay down 27.4%.

The downturn in this field aligns with the views of Stacks co-founder Muneeb Ali at Consensus 2025: "As the initial enthusiasm wanes, more than two-thirds of existing Bitcoin Layer 2 projects will disappear within three years." He predicts that the market will face severe challenges, and the industry's downturn in February suggests that consolidation may have already begun. Looking ahead, platforms that can demonstrate actual utility may prove to be more durable than projects that rely solely on momentum.

Ethereum Layer 2

Ethereum L2 TVL decreased by 23.4% to $14 billion. Arbitrum maintains its leading position with a TVL of $4.5 billion (down 33.4%), while Base rises to second place with a TVL of $4.2 billion (down 10.6%), pushing Optimism ($2.1 billion) to third. Polygon zkEVM surged by 104.1% to $300 million, becoming a rare highlight this month.

Base has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aiming to maintain user stickiness. Unichain's mainnet was launched on February 16, having previously processed 95 million transactions on its testnet, positioning itself as a game changer for scalability performance, with several heavyweight institutions already on board. Starknet's Nums application chain, as a Layer 3 gaming innovation, showcases the future of modular design.

At the same time, Sonic EVM, although not an Ethereum Layer 2, launched its Mobius mainnet on February 27 as the first SVM chain expansion of Solana, attracting a lot of attention, achieving 10,000 TPS, and bringing in $47.6 million in funding for Aave within just a few days. These initiatives indicate that Layer 2 projects are investing more in technology rather than just gimmicks.

Vitalik Buterin commented on February 19, emphasizing that Ethereum needs to clarify its positioning in the face of increasing competition. He advocates for Layer 2 to take a leading role in scalability (such as a 17x transaction improvement) and interoperability, noting that they have evolved from "advanced multi-signatures" into robust networks. Although he did not directly comment on Sonic EVM, its EVM compatibility and speed resonate with his vision of a seamless connection within the "Ethereum universe." However, he also expressed dissatisfaction with the casino-like tendencies in the ecosystem, calling for a focus on real value rather than speculative bubbles.

Financing Situation

Financing activities have slowed down, with a total of 6 transactions completed in February, amounting to $32.4 million. Mango Network raised $13.5 million for its EVM-MoveVM hybrid chain, planning to launch in the first quarter of 2025. Fluent Labs secured $8 million in funding to develop a multi-virtual machine Layer 2 that connects Ethereum and Solana.

The data in this report comes from the public chain research page of a certain data analysis platform, which provides an easy-to-use dashboard containing the most critical statistics and indicators in the field of public chains, updated in real-time.

The content of this article is for industry research and communication purposes only and does not constitute any investment advice. The market is risky, and investment should be cautious.