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

In February 2025, the blockchain market experienced significant adjustments, impacting both mature networks and emerging public chains. Bitcoin demonstrated strong resilience, further solidifying its market dominance, while most chains, including Solana, Avalanche, and Ethereum, suffered substantial declines. Nevertheless, development activities in the public chain sector remained active: the launch of the Berachain mainnet, the upgrade of Base infrastructure, and the introduction of a Layer 2 solution for a certain DEX became highlights of the month.

Market Overview

February market saw a significant pullback: Bitcoin fell from $98,768 to $84,177, a decrease of 14.8%, while Ethereum experienced an even larger drop, falling from $3,065 to $2,216, a decline 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 caused by safety risks. Market sentiment has deteriorated, and risk appetite has decreased, especially in speculative areas such as Memecoins. Globally, the North American market shows cautious optimism due to policy changes, while the Asia-Pacific market feels the impact of hacking attacks more strongly.

Regulatory and Policy Changes

The Trump administration's executive order on cryptocurrency focuses on self-custody and the development of stablecoins, providing rare policy clarity for the industry. However, the hacking incident on a trading platform on February 21 resulted in losses of up to $1.5 billion, setting a record for the largest loss in cryptocurrency history and raising new security concerns, causing a rapid shift in market sentiment. Meanwhile, the SEC's stance has softened, suspending investigations into several cryptocurrency companies and dropping the appeal against the "dealer rule." The bipartisan GENIUS Act (the U.S. Stablecoin National Innovation and Establishment Act) further refines 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 associated tokens quickly cooled due to negative news, leading to a sharp decline in valuation and a significant drop in trading volume. This shift suggests that the market is pulling away from high-risk assets.

Layer 1

Layer 1 public chains are generally under pressure, with a 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 is rising against the trend, up 1.0% to $128.7, while Solana (-36.3%), Avalanche (-35.7%), and others are lagging 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 after the mainnet launch on February 6, with a TVL of $3.2 billion. The chain has issued 80 million BERA tokens and employs a "proof of liquidity" model—an innovative staking method that transforms liquidity into network security. Following a $100 million financing in 2024, this month's airdrop and governance rights have spurred market enthusiasm. Unlike traditional proof of stake, this approach may redefine how public chains balance growth and stability, making Berachain a project worth watching.

The Memecoin craze of Solana has clearly cooled down. High-profile failures, such as the token associated with Argentine President Milei, have damaged market confidence, leading to a significant decline in trading volume on certain DEX platforms. Although Memecoins are unlikely to disappear and can be seen as digital collectible cards, their peak frenzy may have passed, and traders are starting 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 (a decline of 42.0%), followed by Bitlayer ($350 million) and BSquared ($320 million). BOB performed well, experiencing only a 7.9% drop 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 dropping by 31.5%, MAP Protocol down by 29.6%, and Interlay down by 27.4%.

The downturn in this field aligns with the views of Stacks co-founder Muneeb Ali 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 downturn in February suggests that consolidation may have already begun. Looking ahead, platforms that can demonstrate actual utility may be more enduring 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 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 launched Flashblocks (faster transaction confirmations), Appchains (custom L3), and smart wallet sub-accounts, aimed at maintaining user engagement. Unichain's mainnet launched on February 16, having previously processed 95 million transactions on its testnet, positioning itself as a game changer in scalability performance, with heavyweight institutions like Circle joining. 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 Solana's first SVM chain extension attracted significant attention, achieving 10,000 TPS and bringing $47.6 million in funding to a lending protocol within days. These initiatives indicate that Layer 2 projects are investing more in technology rather than just hype.

Vitalik Buterin commented on February 19, emphasizing that Ethereum needs to clarify its positioning in the face of growing competition. He advocates 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 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 the public chain research page of a certain analytical platform, which provides an easy-to-use dashboard containing the most critical statistics and indicators in the public chain field, updated in real time.

This article is for industry research and communication purposes only and does not constitute any investment advice. The market is risky, and investment should be cautious.