February 2025 Public Chain Industry Analysis: Challenges and Innovations in Market Adjustments

In February 2025, the blockchain market experienced a significant adjustment, posing challenges to both mature networks and emerging public chains. Bitcoin showed relatively stable performance, further strengthening its dominant position, while most chains including Solana, Avalanche, and Ethereum saw substantial declines. Nevertheless, development activity in the public chain sector did not come to a halt: the Berachain mainnet launch, Base infrastructure upgrades, and the launch of a Layer 2 solution for a certain DEX became the highlights of the month.

Market Overview

The market saw a significant correction in February: Bitcoin fell from $98,768 to $84,177, a decrease of 14.8%, while Ethereum's drop was even greater, 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 mixed, with investors wavering between optimism and concerns raised by security vulnerabilities. Market sentiment has worsened, and risk appetite has declined, especially in speculative areas such as 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 the industry with rare policy clarity. However, a hacking incident at a trading platform on February 21 resulted in losses of $1.5 billion, setting a record for the largest loss in cryptocurrency history, which raised new security concerns and quickly shifted market sentiment. Meanwhile, the SEC's stance has softened, suspending investigations into certain cryptocurrency firms and dropping appeals against the "dealer rule." The bipartisan GENIUS Act (the American Stablecoin 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 turbulence. The Memecoin craze driven by Argentine President Milei's related tokens has rapidly cooled due to negative news, leading to a sharp decline in valuation and a significant decrease 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 crash of 36.3%.

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

DeFi TVL dropped 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 dark horse, quickly rising to sixth place after the mainnet launch on February 6, with a TVL of $3.2 billion. The chain issued 80 million BERA tokens and adopted a "proof of liquidity" model - an innovative staking method that turns liquidity into network security. Following a $100 million financing in 2024, this month's airdrop and governance incentives have excited the market. 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 for 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. While Memecoins are unlikely to disappear and can be viewed 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, with only a 7.9% drop to $220 million.

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

The downturn in this sector 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's slump in February indicates 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. Arbitrum maintains its leading position with a TVL of $4.5 billion (down 33.4%), while Base climbed 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 has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aimed at maintaining user stickiness. 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 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, Sonic EVM, although 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 increasingly investing in 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 advocates for Layer 2 to play a leading role in scalability (such as a 17x transaction increase) and interoperability, noting that they have evolved from "advanced multi-signatures" to 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, planning to launch in the first quarter of 2025. Fluent Labs secured $8 million in funding to develop a multi-VM 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 cautious.