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

In February 2025, the blockchain market experienced a significant adjustment, posing challenges to both mature networks and emerging public chains. Bitcoin performed relatively steadily, further solidifying its dominant position, while most chains, including Solana, Avalanche, and Ethereum, saw substantial declines. Nevertheless, development activity in the public chain sector did not cease: the Berachain mainnet launch, Base infrastructure upgrades, and the Layer 2 launch of Uniswap became highlights of the month.

Market Overview

February saw a significant market correction: Bitcoin fell 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 follows the bull market in January, but the market signals are complex, with investors wavering between optimistic sentiment and concerns raised by security vulnerabilities. Market sentiment has deteriorated, and risk appetite has declined, especially in more speculative areas. 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 Changes

The U.S. government’s cryptocurrency executive order focuses on self-custody and stablecoin development, providing the industry with rare policy clarity. However, the massive hacking incident on February 21 caused a loss of $1.5 billion, setting a record for the largest loss in cryptocurrency history, raising new security concerns, and quickly shifting market sentiment. Meanwhile, the SEC’s stance has softened, suspending investigations into certain large trading platforms and dropping its appeal of the “dealer rules.” The bipartisan GENIUS 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 the Argentine president’s related tokens has quickly cooled due to negative news, leading to a plummet in valuation and a significant shrinkage 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 the total market value 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 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 as a strong contender, quickly rising to sixth place after its mainnet launch on February 6, with a TVL of $3.2 billion. 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 a $100 million financing in 2024, this month’s airdrop and governance rights have fueled 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 on Solana has clearly cooled down. High-profile failures have damaged market confidence, leading to a significant decline in trading volume on some DEX platforms. While Memecoins are unlikely to disappear and can be viewed as digital collectible cards, the frenzy peak 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 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 declining by 7.9% to $220 million.

Among medium-sized platforms, Merlin performs 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 stagnation in this field aligns with the views of industry experts: “As the initial enthusiasm wanes, 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’s downturn in February indicates that consolidation may have already begun. Looking ahead, platforms that can demonstrate actual utility may prove to be more enduring than projects that rely solely on momentum.

Ethereum Layer 2

Ethereum L2 TVL fell by 23.4% to $14 billion. A trading platform retains its leading position with a TVL of $4.5 billion (down 33.4%), while another platform climbed to second place with a TVL of $4.2 billion (down 10.6%), pushing another platform ($2.1 billion) to third place. Polygon zkEVM surged by 104.1% to $30 million, becoming a rare highlight this month.

A certain platform has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aiming to maintain user engagement. Unichain’s mainnet was launched on February 16, having previously processed 95 million transactions on its testnet, positioning itself as a game changer in scalability performance, with several heavyweight institutions joining. Starknet’s Nums application chain, as a Layer 3 game 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 expansion attracted a lot of attention, achieving 10,000 TPS and bringing $47.6 million in funding to a certain application 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 the need for Ethereum to clarify its positioning amid increasing competition. He advocates for Layer 2 to take the lead in scalability (such as a 17-fold increase in transactions) and interoperability, pointing out 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, 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.

The content of 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.