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

In February 2025, the blockchain market experienced significant adjustments, posing challenges to both mature and emerging public chains. Bitcoin demonstrated robustness, while most other chains suffered substantial declines. Nevertheless, development activity in the public chain sector remained vibrant, with the launch of the Berachain mainnet, upgrades to the Base infrastructure, and the introduction of Layer 2 by Uniswap being the highlights of the month.

Market Overview

February market showed a significant pullback: Bitcoin fell from $98,768 to $84,177, a drop of 14.8%; Ethereum saw a larger decline, falling from $3,065 to $2,216, down 27.7%. In the last week of the month, heightened security concerns spread, exacerbating selling pressure.

This pullback closely follows January's bull market, but market signals are complex, with investors wavering between optimism and concerns raised by safety risks. 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 has felt the impact of safety incidents more strongly.

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, the security incident at a certain trading platform on February 21 resulted in a loss of $1.5 billion, setting a record for the largest loss in cryptocurrency history and raising new security concerns, causing market sentiment to shift rapidly. Meanwhile, the attitude of regulators has softened, pausing investigations into several major trading platforms and dropping appeals 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 volatility. The speculative frenzy driven by a certain country's president-related tokens quickly cooled down due to negative news, leading to a sharp drop 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 the 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 share of a certain chain slightly increased to 3.7%, but after a price drop of 36.3%, a certain public chain's share fell from 4.0% to 3.3%.

Litecoin is on the rise, up 1.0% to $128.7, while some public chains lag behind with declines of over 35%.

The total locked value in DeFi ( TVL ) decreased by 20.0% to $82.9 billion, of which Ethereum accounts for $44.9 billion (a decrease of 21.7%), and a certain public chain accounts for $8.6 billion (a decrease of 34.1%).

Berachain has emerged rapidly, jumping to sixth place after its mainnet launch on February 6, with a TVL of $3.2 billion. The chain 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 incentives have sparked 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 speculative token craze of a certain public blockchain has clearly cooled down. High-profile failure cases have damaged market confidence, leading to a significant decline in trading volume on related DEX platforms. Although such tokens will not disappear and can be seen as digital collectible cards, their peak frenzy may have passed, and traders are beginning to focus more on fundamentals rather than hype.

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 well, only dropping 7.9% to $220 million.

Among medium-sized platforms, Merlin performed well, with a slight decrease in TVL of 9.3% to $150 million. Smaller platforms faced greater pressure, with SatoshiVM down 31.5%, MAP Protocol down 29.6%, and Interlay down 27.4%.

The downturn in the sector aligns with the views of an industry expert at Consensus 2025: "As initial enthusiasm fades, 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 industry downturn in February suggests 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 another platform rises 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.

A certain platform has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aimed at maintaining user stickiness. Unichain's mainnet was launched on February 16, having processed 95 million transactions on its testnet, positioned as a game changer for 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, although Sonic EVM is not an Ethereum Layer 2, its Mobius mainnet launch on February 27 as the first SVM chain extension of a certain public chain attracted a lot of attention, achieving 10,000 TPS and bringing $47.6 million in funding to Aave within a few days. These initiatives indicate that Layer 2 projects are increasingly investing in technology rather than just hype.

A well-known figure commented on February 19, emphasizing that Ethereum needs to clarify its positioning in an increasingly competitive environment. He advocates for Layer 2 to take a leadership role in scalability (such as a 17-fold increase in transactions) 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 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 Status

Funding 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 a certain public chain.