Review of the Public Chain Industry in February 2025: Challenges and Innovations in Market Adjustment

In February 2025, the blockchain market underwent significant adjustments, posing challenges to various public chains. Bitcoin demonstrated resilience, further consolidating its dominant position, while most chains, including Solana, Avalanche, and Ethereum, experienced substantial declines. Nevertheless, development activities in the public chain space did not come to a halt: the Berachain mainnet launch, Base infrastructure upgrades, and the rollout of Uniswap's Layer 2 solution became the highlights of the month.

Market Overview

The market showed a significant correction in February: Bitcoin fell from $98,768 to $84,177, a decline of 14.8%, while Ethereum fell even more, from $3,065 to $2,216, down 27.7%. In the last week of the month, as concerns over security risks spread, selling pressure intensified.

This pullback closely follows January's bull market, but market signals are complex, with investors wavering between optimism and safety concerns. Market sentiment has deteriorated, and risk appetite has decreased, especially in more speculative areas. Globally, the North American market shows cautious optimism due to policy changes, while the Asia-Pacific market feels the impact of safety events more acutely.

Regulatory and Policy Trends

The U.S. government's cryptocurrency executive order focuses on self-custody and the development of stablecoins, providing the industry with rare policy clarity. However, a security 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, which triggered new security concerns and quickly changed market sentiment. Meanwhile, regulatory agencies have eased their stance, pausing investigations into several well-known companies and dropping appeals against the "dealer rules." The bipartisan GENIUS Act (the U.S. Stablecoin National Innovation and Establishment Act) further refines the regulatory framework for stablecoins, demonstrating a friendly trend in the U.S. regulatory environment.

Investor behavior reflects this turbulence. The speculative frenzy driven by specific tokens rapidly cooled due to related negative news, leading to a sharp decline in valuations and a significant shrinkage in trading volumes. This shift suggests that the market is retreating from high-risk assets.

Performance of Layer 1 Public Chains

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

Litecoin has risen slightly by 1.0% to $128.7, while Solana (-36.3%), Avalanche (-35.7%), and others have lagged behind.

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

Berachain has emerged prominently, quickly rising to the sixth position after its mainnet launch on February 6, with a TVL of 3.2 billion USD. The chain has issued 80 million BERA tokens and adopts a "proof of liquidity" model—an innovative staking method that transforms liquidity into network security. Following its 2024 financing, this month's airdrop and governance incentives have stimulated 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 craze of a certain public blockchain has clearly cooled down. High-profile failures have damaged market confidence, leading to a significant decline in trading volume across multiple DEX platforms. Although these tokens are not going to disappear and can be seen as digital collectible cards, their frenzied peak 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 7.9% to $220 million.

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

The downturn in this field aligns with predictions from industry experts: "As initial enthusiasm fades, more than two-thirds of existing Bitcoin Layer 2 projects will disappear within three years." The industry's slump in February suggests that consolidation may have already begun. Looking ahead, platforms that can demonstrate real utility may prove to be more resilient than projects that rely solely on momentum.

Ethereum Layer 2 Development

Ethereum L2 TVL decreased by 23.4% to $14 billion. A leading project maintains its top position with a TVL of $4.5 billion (down 33.4%), while another project with a TVL of $4.2 billion (down 10.6%) rises to second place, pushing the third place (with $2.1 billion) to third. A certain project surged by 104.1% to $300 million, becoming a rare highlight this month.

A well-known project has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aiming to maintain user stickiness. Unichain's mainnet launched on February 16, after its testnet had processed a total of 95 million transactions, positioning itself as a game changer in scaling performance, with multiple heavyweight institutions onboard. The Nums application chain of a certain project, as an innovation in Layer 3 gaming, 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 a certain public chain 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 initiatives 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 advocated for Layer 2 to play a leading role in scalability (such as a 17-fold transaction increase) and interoperability, pointing out that they have evolved from "advanced multi-signature" into a powerful network. 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, totaling $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.