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

In February 2025, the blockchain market underwent significant adjustments, posing challenges to various public chain networks. Bitcoin demonstrated resilience, while other mainstream chains generally declined. Nevertheless, development activities in the public chain sector remained active, with the launch of the Berachain mainnet, upgrades to the Base infrastructure, and Uniswap's Layer 2 solutions becoming the focal points of the month.

Market Overview

February saw a significant market correction: Bitcoin fell from $98,768 to $84,177, a decrease of 14.8%; Ethereum experienced an even larger drop, falling from $3,065 to $2,216, down 27.7%. In the last week of the month, heightened security concerns exacerbated the selling pressure.

This pullback follows the bull market in January, but market signals are complex, and investors are oscillating between optimism and concerns over safety risks. Market sentiment has deteriorated, and risk appetite has decreased, especially in more speculative areas. Globally, the North American market is cautiously optimistic due to policy changes, while the Asia-Pacific market has felt the impact of safety incidents more strongly.

Regulatory and Policy Trends

The U.S. government's cryptocurrency executive order focuses on self-custody and the development of stablecoins, providing clarity in policy for the industry. However, a major hacking incident on February 21 resulted in a loss of $1.5 billion, setting the record for the largest loss in cryptocurrency history, raising new security concerns and causing a rapid shift in market sentiment. At the same time, regulatory attitudes have softened, with investigations into several well-known crypto companies paused and appeals on certain rules abandoned. The bipartisan stablecoin bill further refines the regulatory framework, indicating a friendlier regulatory environment in the U.S.

Investor behavior reflects this turbulence. The craze driven by tokens related to the president of a certain country rapidly cooled due to negative news, leading to a sharp decline in valuation and a significant contraction in trading volume. This shift suggests that the market is retreating from high-risk assets.

Layer 1 Public Chain Performance

Layer 1 public chains are generally under pressure, with a total market value 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 share of a well-known chain slightly increased to 3.7%, but another mainstream public chain saw its share drop from 4.0% to 3.3% after a price crash of 36.3%.

Litecoin rose by 1.0% to $128.7, while other major public chains like Avalanche fell by 35.7%.

The total locked value in DeFi ( TVL ) decreased by 20.0% to $82.9 billion, with Ethereum at $44.9 billion (a decrease of 21.7%) and another major public chain at $8.6 billion (a decrease of 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 has issued 80 million BERA tokens, using a "liquidity proof" model—an innovative staking method that transforms liquidity into network security. Following significant financing in 2024, this month's airdrop and governance rights have energized market enthusiasm. This approach may redefine how public chains balance growth and stability, making Berachain a project worth watching.

The speculative token craze of a certain public blockchain has clearly cooled down. High-profile failure cases have damaged market confidence, resulting in a significant decline in trading volume on related DEX platforms. Although these tokens will not disappear and can be considered digital collectibles, 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 (down 42.0%), followed by Bitlayer ($350 million) and BSquared ($320 million). BOB performed relatively well, only dropping 7.9% to $220 million.

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

The downturn in this sector aligns with industry experts' predictions that most existing Bitcoin Layer 2 projects will disappear in the coming years. The industry slump in February suggests that consolidation may have already begun. In the future, platforms that can demonstrate actual utility may be more enduring than projects that rely solely on momentum.

Ethereum Layer 2

Ethereum L2 TVL fell by 23.4% to $14 billion. Arbitrum leads 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%), and Optimism (at $2.1 billion) drops to third. Polygon zkEVM surged by 104.1% to $300 million, becoming the highlight of the month.

Base has launched several technical upgrades, including faster transaction confirmations, customized L3, and smart wallet sub-accounts, aiming to enhance user retention. Unichain's mainnet was launched on February 16, after its testnet had processed a total of 95 million transactions, positioning it as a high-performance scaling solution with several well-known institutions already on board. Starknet's Nums application chain, as a Layer 3 gaming innovation, showcases the potential of modular design.

At the same time, although it is not an Ethereum Layer 2, Sonic EVM, as the first SVM chain extension of a certain public chain, attracted a lot of attention with its Mobius mainnet launch on February 27, achieving 10,000 TPS and bringing considerable funds to a certain DeFi protocol in a short period. These initiatives indicate that Layer 2 projects are deepening their technical investments.

The founder of Ethereum commented on February 19, emphasizing that Ethereum needs to clarify its position in the competition. He urged Layer 2 to take the lead in scalability and interoperability, noting that they have evolved from simple multi-signatures to robust networks. He called for a focus on real value rather than speculative bubbles and expressed dissatisfaction with the casino-like tendencies within the ecosystem.

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, which is planned for 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 a certain public chain.