February 2025 Public Chain Industry Research Report: Challenges and Innovations Amid Market Adjustments

In February 2025, the blockchain market experienced a significant adjustment, posing challenges to various public chain networks. Bitcoin demonstrated resilience, further solidifying its dominant position, while most chains, including Solana, Avalanche, and Ethereum, saw substantial declines. Nevertheless, development activity in the public chain sector remained vibrant: the launch of the Berachain mainnet, upgrades to the Base infrastructure, and the introduction of a Layer 2 solution by a certain DEX were highlights of the month.

Market Overview

February market showed a significant pullback: Bitcoin fell from $98,768 to $84,177, a drop of 14.8%, while Ethereum experienced a larger decline, dropping from $3,065 to $2,216, a drop of 27.7%. In the last week of the month, panic emotions triggered by security concerns spread, exacerbating the selling pressure.

This pullback follows the bull market in January, but the market signals are complex, with investors wavering between optimism and safety concerns. Market sentiment has worsened, and risk appetite has declined, especially in speculative areas such as Memecoin. Globally, the North American market shows cautious optimism due to policy changes, while the Asia-Pacific market has felt the impact of hacking attacks more strongly.

Regulatory and Policy Trends

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, a hacking incident on February 21 at a certain trading platform 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. Meanwhile, regulators have softened their stance, suspending investigations into several cryptocurrency companies and dropping the appeal against the "trader rules." The bipartisan GENIUS Act (the U.S. Stablecoin National Innovation and Establishment Act) further strengthens the regulatory framework for stablecoins, indicating a friendly trend in the U.S. regulatory environment.

Investor behavior reflects this turmoil. The Memecoin craze driven by a token related to the president of a South American country quickly cooled down due to negative news, resulting in a sharp drop in valuation and a significant shrinkage in trading volume. This shift suggests that the market is retreating from high-risk assets.

Layer 1 Public Chain

Layer 1 public chains are generally under pressure, with a total market capitalization dropping 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 share of a certain trading platform chain slightly increased to 3.7%, but Solana's share fell from 4.0% to 3.3% after a price drop 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 locked value in DeFi ( TVL ) decreased by 20.0% to 82.9 billion USD, with Ethereum at 44.9 billion USD (down 21.7%) and Solana at 8.6 billion USD (down 34.1%).

Berachain has emerged rapidly, jumping to sixth place after the mainnet launch on February 6, with a TVL of $3.2 billion. The chain issued 80 million BERA tokens and adopted a "Proof of Liquidity" model - an innovative staking method that transforms liquidity into network security. Following a $100 million financing round in 2024, this month's airdrop and governance rights have spurred 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 Memecoin craze of Solana has noticeably cooled down. High-profile failures have damaged market confidence, leading to a significant decline in trading volumes on multiple decentralized exchanges. Although Memecoins will not disappear and can be seen as digital collectible cards, their peak frenzy may have passed, and traders are starting to pay more attention to fundamentals rather than speculation.

Bitcoin Layer 2 and Sidechains

The TVL of Bitcoin L2 and sidechains has reduced 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, only decreasing by 7.9% to $220 million.

Among medium-sized platforms, Merlin performed relatively well, with a slight decrease in TVL of 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 sluggishness in this field aligns with the views of a blockchain expert at Consensus 2025: "As initial enthusiasm wanes, over 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 slump in February suggests that consolidation may have already begun. Looking ahead, platforms that can demonstrate real utility may prove to be more durable than projects that rely solely on momentum.

Ethereum Layer 2

Ethereum L2 TVL fell by 23.4% to $14 billion. Arbitrum remains in the lead with a TVL of $4.5 billion (down 33.4%), while Base climbs 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 retention. Unichain's mainnet was launched on February 16, after its testnet processed a total of 95 million transactions, positioning itself as a game changer in 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, attracted a lot of attention with its Mobius mainnet launch on February 27 as the first SVM chain expansion of Solana, achieving 10,000 TPS and bringing $47.6 million in funding to a lending protocol within a few days. These moves indicate that Layer 2 projects are investing more in technology rather than just hype.

The founder of Ethereum commented on February 19, emphasizing that Ethereum needs to clarify its positioning in the face of increasing competition. He advocated for Layer 2 to take a leading role in scalability (such as a 17x transaction increase) 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 to 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-VM Layer 2 that connects Ethereum and Solana.

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

This content is for industry research and communication purposes only and does not constitute any investment advice. The market carries risks, and investments should be made with caution.