February 2025 Public Chain Industry Report: Innovation and Development in Market Challenges

In February 2025, the blockchain market experienced a significant adjustment, presenting challenges to both established networks and emerging public chains. Bitcoin performed relatively steadily, with its dominant position strengthened, while most chains, including Solana, Avalanche, and Ethereum, saw considerable declines. Nevertheless, development activity in the public chain sector did not stagnate: the launch of the Berachain mainnet, the Base infrastructure upgrade, 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 decline of 14.8%, while Ethereum saw an even larger drop, falling 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 market signals are complex, with investors oscillating between optimism and concerns raised by security vulnerabilities. Market sentiment has worsened, and risk appetite has declined, particularly in more speculative areas. Globally, the North American market shows cautious optimism due to policy changes, while the Asia-Pacific market has felt the impact of security incidents more acutely.

Regulatory and Policy Changes

The U.S. government's executive order on cryptocurrency focuses on self-custody and the development of stablecoins, providing the industry with rare policy clarity. However, a major security incident on February 21 resulted in a loss of $1.5 billion, setting a record for the largest loss in cryptocurrency history and raising new security concerns, leading to a rapid shift in market sentiment. At the same time, the attitude of regulators has softened, pausing investigations into several well-known companies and abandoning appeals on the "dealer rule." Bipartisan-supported legislation further strengthens the regulatory framework for stablecoins, indicating a friendly trend in the regulatory environment.

Investor behavior reflects this turmoil. The hype driven by tokens related to a certain country's president rapidly cooled down due to negative news, causing a sharp drop in valuation and a significant contraction in trading volume. This shift implies that the market is retreating from high-risk assets.

Layer 1 Public Chain

Layer 1 public chains are generally under pressure, with the total market capitalization declining by 20.8% to $2.3 trillion. Bitcoin's dominance rose from 71.3% to 74.2%, while Ethereum's share shrank from 14.0% to 11.9%. The BNB chain's share slightly increased to 3.7%, but Solana's share fell from 4.0% to 3.3% after a price drop of 36.3%.

Litecoin rose against the trend, increasing by 1.0% to $128.7, while Solana (-36.3%), Avalanche (-35.7%), and others underperformed.

The total value locked (TVL) in DeFi 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 risen rapidly, jumping to sixth place after its mainnet launch on February 6, with a TVL of $3.2 billion. The chain issued 80 million BERA tokens and adopted a "liquidity proof" model—an innovative staking method that converts liquidity into network security. Following a large-scale fundraising in 2024, this month's airdrop and governance incentives have sparked market enthusiasm. Unlike traditional proof of stake, this approach could redefine how public chains balance growth and stability, making Berachain a project worth watching.

The speculative token frenzy of Solana has clearly cooled down. High-profile failure cases have damaged market confidence, leading to a significant decline in trading volumes on certain decentralized exchanges. Although these types of tokens will not disappear and can be seen 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 decreased by 24.5% from $2.7 billion to $2.1 billion. Core leads with a TVL of $460 million (down 42.0%), followed by Bitlayer ($350 million) and BSquared ($320 million). BOB performed well, with a decline of only 7.9% to $220 million.

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

The stagnation in this sector aligns with the views of industry experts, predicting that over two-thirds of the existing Bitcoin Layer 2 projects will disappear within three years. The industry slump in February indicates 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 dropped 23.4% to $14 billion. A well-known platform maintains its leading position with a TVL of $4.5 billion (down 33.4%), while another platform climbed to second place with a TVL of $4.2 billion (down 10.6%), pushing the third place ($2.1 billion) down to third. Polygon zkEVM surged 104.1% to $30 million, becoming a rare highlight this month.

A certain platform has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aiming to maintain user engagement. Unichain's mainnet was launched on February 16, having processed a total of 95 million transactions on its testnet, positioned 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, although Sonic EVM is not an Ethereum Layer 2, its Mobius mainnet launch on February 27 as the first SVM chain expansion of Solana attracted a lot of attention, achieving 10,000 TPS and bringing $47.6 million in funding to a certain DeFi protocol within a few days. These measures indicate that Layer 2 projects are increasingly investing in technology rather than just hype.

The founder of Ethereum commented on February 19, emphasizing that Ethereum needs to clarify its positioning amid increasing competition. He advocates for Layer 2 to take the lead in scalability (such as a 17-fold increase in transactions) and interoperability, noting that they have evolved from "advanced multi-signatures" into powerful 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, with plans 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.

This report's data comes from a public chain research page of a certain data analysis platform, which provides an easy-to-use dashboard that includes the most critical statistics and indicators in the public chain field, 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 has risks, and investment should be approached with caution.