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

In February 2025, the blockchain market underwent a significant adjustment, presenting challenges to major public chains. Bitcoin demonstrated strong resilience, while most chains, including Ethereum, Solana, and Avalanche, experienced substantial declines. Nevertheless, development activity within the public chain ecosystem remained vibrant, with highlights of the month including the launch of the Berachain mainnet, the upgrade of Base infrastructure, and Uniswap's introduction of Layer 2 solutions.

Market Overview

The market showed a significant correction in February: Bitcoin fell from $98,768 to $84,177, a drop of 14.8%; Ethereum experienced an even larger decline, dropping from $3,065 to $2,216, a decrease of 27.7%. In the last week of the month, panic triggered by security concerns spread, further intensifying the selling pressure.

This pullback follows the bull market in January, but the market signals are complex, with investors wavering between optimism and safety concerns. Market sentiment has deteriorated, and risk appetite has decreased, especially in speculative areas like Memecoins. Globally, the North American market shows a cautiously optimistic attitude due to policy changes, while the Asia-Pacific market has felt the impact of hacking attacks more profoundly.

Regulatory and Policy Trends

The cryptocurrency executive order issued by the government focuses on self-custody and the development of stablecoins, providing rare policy clarity for the industry. However, a hacking incident on February 21 at a trading platform resulted in a loss of $1.5 billion, setting a record for the largest loss in cryptocurrency history, raising new security concerns and leading to a sharp shift in market sentiment. At the same time, the attitude of regulators has softened, halting investigations into several well-known trading platforms and DEXs, and abandoning appeals against the "trader rules." 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 turbulent situation. The Memecoin craze driven by tokens related to a certain country's president quickly 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 the total market value 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 trading platform's chain slightly increased to 3.7%, but Solana's share dropped from 4.0% to 3.3% after a price plunge 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 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 dark horse, rapidly rising 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, adopting a "Proof of Liquidity" model—an innovative staking method that transforms liquidity into network security. Following a $100 million financing round in 2024, this month's airdrop and governance incentives have sparked market enthusiasm. Unlike traditional Proof of Stake, this approach could redefine how public chains balance growth and stability, making Berachain a project worth watching.

The Memecoin craze of Solana has clearly cooled off. High-profile failures have damaged market confidence, leading to a significant decline in trading volumes on multiple 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 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, with only a 7.9% decline to $220 million.

Among medium-sized platforms, Merlin performed well, with TVL decreasing slightly 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%.

The downturn in this field aligns with the views of an industry expert at Consensus 2025: "As 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 downturn in February suggests that consolidation may have already begun. Looking ahead, platforms that can demonstrate real utility may prove to be more durable than projects that rely solely on momentum.

Ethereum Layer 2

Ethereum L2 TVL fell by 23.4% to $14 billion. Arbitrum maintains its leading position with a TVL of $4.5 billion (down 33.4%), while a certain platform 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 $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, aimed at maintaining 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 for scalability performance, with several heavyweight institutions already on board. 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 Solana's first SVM chain expansion, achieving 10,000 TPS and bringing in $47.6 million in funding for a DeFi platform within a few days. These initiatives indicate that Layer 2 projects are increasingly investing in technology rather than just hype.

A well-known developer commented on February 19, emphasizing that Ethereum needs to clarify its positioning in the face of increasing competition. He advocates for Layer 2 to take a leading role in scalability (such as a 17-fold increase in transactions) and interoperability, pointing out that they have evolved from "advanced multi-signatures" into robust 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 USD. Mango Network raised 13.5 million USD for its EVM-MoveVM hybrid chain, which is planned to launch in the first quarter of 2025. Fluent Labs secured 8 million USD in funding to develop a multi-virtual machine Layer 2 that connects Ethereum and Solana.