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

In February 2025, the blockchain market experienced significant adjustments, putting pressure on both mature networks and emerging public chains. Bitcoin performed relatively steadily, further consolidating 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 Berachain mainnet went live, Base infrastructure was upgraded, and Uniswap launched Layer 2, which were the highlights of the month.

Market Overview

February saw a significant market correction: Bitcoin dropped from $98,768 to $84,177, a decline of 14.8%, while Ethereum experienced 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 the market signals are complex, with investors wavering between optimism and concerns triggered by security vulnerabilities. Market sentiment has deteriorated, and risk appetite has declined, especially in speculative areas like Memecoins. Globally, the North American market shows cautious optimism due to policy changes, while the Asia-Pacific market has felt the impact of hacker attacks more acutely.

Regulatory and Policy Changes

The Trump administration'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 a certain trading platform on February 21 resulted in a loss of $1.5 billion, setting the record for the largest loss in cryptocurrency history and raising new security concerns, leading to a rapid shift in market sentiment. Meanwhile, the SEC has softened its stance, pausing investigations into several companies and dropping its appeal against the "dealer rule." 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 Argentine President Milei's related tokens has quickly cooled due to negative news, resulting in a sharp decline in valuation 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 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 dropped from 4.0% to 3.3% after a price plunge of 36.3%.

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

DeFi TVL 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 with a TVL of $3.2 billion following the mainnet launch on February 6. The chain issued 80 million BERA tokens and employs a "proof of liquidity" model - an innovative staking method that converts liquidity into network security. Following a $100 million funding round 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 memecoin craze on Solana has clearly cooled down. High-profile failure cases, such as the token related to Argentine President Milei, have damaged market confidence, leading to a significant decline in trading volume on a certain DEX platform. While memecoins 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 & 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 (down 42.0%), followed by Bitlayer ($350 million) and BSquared ($320 million). BOB performed well, only dropping 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 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 fades, 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 slump 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. A certain trading platform 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 skyrocketed 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, after its testnet had processed a total of 95 million transactions, positioning itself as a game changer in scalability performance, with several heavyweight institutions joining. Starknet's Nums application chain, as a Layer 3 gaming innovation, showcases the future of modular design.

At the same time, Sonic EVM, while 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 in $47.6 million in funding for Aave within a few days. These initiatives indicate that Layer 2 projects are doubling down on technology rather than just hype.

Vitalik Buterin 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 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 USD. Mango Network raised 13.5 million USD for its EVM-MoveVM hybrid chain, planning to launch in the first quarter of 2025. Fluent Labs secured 8 million USD in funding to develop a multi-virtual machine Layer 2 that connects Ethereum and Solana.

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 done with caution.