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

In February 2025, the blockchain market underwent significant adjustments, posing challenges to various public chain networks. Bitcoin demonstrated robustness, while most chains, including Solana, Avalanche, and Ethereum, experienced considerable declines. Nonetheless, development activities in the public chain sector remained active, with highlights this month including the launch of the Berachain mainnet, upgrades to the Base infrastructure, and Uniswap's introduction of Layer 2.

Market Overview

The market showed a significant pullback trend in February: Bitcoin fell from $98,768 to $84,177, a decline of 14.8%; Ethereum's decline was even more severe, dropping from $3,065 to $2,216, a decrease of 27.7%. In the last week of the month, selling pressure intensified due to security concerns.

This pullback closely follows the bull market in January, but the market signals are complex, with investors wavering between optimism and safety concerns. Market sentiment has worsened, with a decline in risk appetite, 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 safety events more strongly.

Regulatory and Policy Trends

The U.S. government's executive order on cryptocurrency 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 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 attitude has softened, suspending investigations into several well-known cryptocurrency companies and abandoning its appeal of the "dealer rule." The bipartisan GENIUS Act further improves 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 a certain country's president-related tokens rapidly cooled down 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 capitalization decline of 20.8% to $2.3 trillion. Bitcoin's dominance has risen from 71.3% to 74.2%, while Ethereum's share has decreased from 14.0% to 11.9%. The share of a certain public chain has slightly increased to 3.7%, but Solana's share has dropped from 4.0% to 3.3% after a price plunge of 36.3%.

Litecoin rose against the trend by 1.0% to $128.7, while Solana (-36.3%), Avalanche (-35.7%), and others performed poorly.

The total value locked (TVL) in DeFi 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 issued 80 million BERA tokens and adopted 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 excited the market. This novel approach could redefine how public chains balance growth and stability, making Berachain a project worth paying attention to.

The Memecoin craze for Solana has明显 cooled down. High-profile failures have damaged market confidence, leading to a significant decline in trading volume across multiple DEX platforms. Although Memecoins will not completely disappear and can be seen as digital collectible cards, their peak frenzy may have passed, and traders are starting to pay more attention to 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 stable, with a slight decrease in TVL by 9.3% to $150 million. Small platforms, on the other hand, faced greater pressure, with SatoshiVM down 31.5%, MAP Protocol down 29.6%, and Interlay down 27.4%.

A well-known developer predicts: "As the initial enthusiasm wanes, more than two-thirds of existing Bitcoin Layer 2 projects will disappear within three years." The industry's slump in February may mark the beginning of consolidation. Looking ahead, platforms that can demonstrate actual utility may be more resilient than projects that rely solely on momentum.

Ethereum Layer 2 Development

Ethereum L2 TVL fell by 23.4% to $14 billion. A certain Layer 2 platform maintains 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%). Polygon zkEVM surged by 104.1% to $30 million, becoming a rare highlight this month.

A well-known Layer 2 platform has launched Flashblocks (faster transaction confirmations), Appchains (customizable L3), and smart wallet sub-accounts, aimed at enhancing user experience. 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 gaming innovation, showcases the future of modular design.

At the same time, while Sonic EVM is not an Ethereum Layer 2, its launch on the Mobius mainnet on February 27 as Solana's first SVM chain extension attracted a lot of attention, 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 technological innovation.

The founder of Ethereum commented on February 19, emphasizing that Ethereum needs to clearly define its position amidst increasing competition. He advocates for Layer 2 to take the lead in scalability and interoperability, pointing out that they have evolved from "advanced multi-signatures" into powerful networks. He calls for a focus on real value rather than speculative bubbles and expresses dissatisfaction with the casino-like tendencies in 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, 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.