February 2025 Public Chain Market Analysis: Challenges and Breakthroughs in Adjustment

In February 2025, the blockchain industry experienced a significant market adjustment, affecting various public chain networks to varying degrees. Nevertheless, Bitcoin still demonstrated strong resilience, further consolidating its dominant position. Meanwhile, most public chains, including Solana, Avalanche, and Ethereum, faced substantial declines. However, the pace of innovation in the public chain sector did not slow down, with the successful launch of the Berachain mainnet, infrastructure upgrades for Base, and a new layout of a certain DEX on Layer 2 becoming the highlights of the month.

Market Overview

The market experienced a significant pullback in February: Bitcoin fell from $98,768 to $84,177, a decline of 14.8%; Ethereum had an even larger drop, 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 bullish market trend of January, but the market signals are complex, with investors oscillating between optimism and safety concerns. 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 hacker attacks more strongly.

Policy Environment Changes

The U.S. government's cryptocurrency executive order focuses on self-custody and the development of stablecoins, providing rare policy clarity for the industry. However, the hacking incident on February 21 at a certain trading platform resulted in a loss of $1.5 billion, setting the record for the largest single loss in cryptocurrency history, raising new security concerns and quickly shifting market sentiment. Meanwhile, the stance of regulators has softened, pausing investigations into several well-known trading platforms and dropping the appeal on 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 speculation frenzy driven by tokens related to a certain country's president quickly cooled due to negative news, leading to a sharp decline in valuation and a significant shrinkage 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 rose from 71.3% to 74.2%, while Ethereum's share shrank from 14.0% to 11.9%. 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 is rising against the trend, up 1.0% to $128.7, while Solana (-36.3%), Avalanche (-35.7%), and others are lagging behind.

The total locked value in DeFi is ( 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 strongly, 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, adopting a "proof of liquidity" model—an innovative staking method that converts liquidity into network security. Following a $100 million financing in 2024, this month's airdrop and governance rights have fueled market enthusiasm.

The speculative token frenzy of Solana has clearly cooled down. High-profile failures have damaged market confidence, leading to a significant decline in trading volumes across various decentralized exchanges. Although these tokens are unlikely to disappear and can be seen as digital collectibles, their peak frenzy may be over, and traders are starting to focus more on fundamentals rather than speculation.

Bitcoin Layer 2 and 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 performed relatively well, with TVL decreasing slightly by 9.3% to $150 million. Smaller platforms faced greater pressure, with SatoshiVM down by 31.5%, MAP Protocol down by 29.6%, and Interlay down by 27.4%.

A co-founder of a certain project predicted at Consensus 2025: "As the initial enthusiasm wanes, over two-thirds of existing Bitcoin Layer 2 projects will disappear within three years." The sluggish market in February may indicate that consolidation has begun. Looking ahead, platforms that can demonstrate real utility may be more durable 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 Base climbed to second place with a TVL of $4.2 billion (down 10.6%), pushing another platform ($2.1 billion) to third. Polygon zkEVM surged 104.1% to $30 million, becoming a rare highlight this month.

Base launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts aimed at retaining 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 gaming 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 $47.6 million in funding to a certain lending protocol 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 that Ethereum needs to clarify its positioning in the face of increasing competition. He advocated 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 robust networks. 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, planning 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.