Overview of Public Chain Industry Development in February 2025: Challenges and Innovations Amid Market Adjustments

In February 2025, the blockchain market experienced a significant adjustment, affecting various major public chain networks to varying degrees. Bitcoin demonstrated strong resistance to pressure, while other mainstream chains including Solana, Avalanche, and Ethereum faced substantial declines. Despite the tightening market environment, development activities in the public chain sector did not stagnate, with several important projects such as the Berachain mainnet, the Base infrastructure upgrade, and a Layer 2 solution from a well-known DEX being launched in the same month.

Market Overview

The market showed a significant correction trend in February: Bitcoin fell from $98,768 to $84,177, a decline of 14.8%, while Ethereum experienced a more pronounced drop, from $3,065 to $2,216, a decline of 27.7%. In the last week of the month, panic triggered by security incidents spread, further intensifying the selling pressure in the market.

This pullback follows the upward trend in January, but market signals are complex, with investors wavering between optimism and concerns brought about by safety risks. Market sentiment has deteriorated, and risk appetite has declined, especially in some highly 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 rare policy clarity for the industry. However, a security incident at a certain trading platform on February 21 resulted in a loss of $1.5 billion, setting a record for the largest single loss in cryptocurrency history, raising new security concerns and causing a swift shift in market sentiment. Meanwhile, the SEC's stance has softened, suspending investigations into certain major cryptocurrency firms and dropping its appeal against the "dealer rule." The bipartisan GENIUS Act (the U.S. Stablecoin National 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 turmoil. The speculative frenzy driven by tokens related to a certain country's president quickly cooled due to negative news, leading to a plummeting valuation and a significant shrinkage in trading volume. This shift suggests that the market is retreating from high-risk assets.

Development of Layer 1 Public Chains

Layer 1 public chains are generally under pressure, with a total market capitalization dropping by 20.8% to $2.3 trillion. Bitcoin's dominance increased from 71.3% to 74.2%, while Ethereum's share shrank from 14.0% to 11.9%. The BNB chain's share slightly rose to 3.7%, but Solana's share fell from 4.0% to 3.3% after a price drop of 36.3%.

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

The total locked value in DeFi is ( TVL ) decreased by 20.0% to 82.9 billion USD, with Ethereum at 44.9 billion USD (down 21.7%) and Solana at 8.6 billion USD (down 34.1%).

Berachain has rapidly risen to sixth place since the mainnet launch on February 6, with a TVL of 3.2 billion USD. The chain has issued 80 million BERA tokens, using 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 could redefine how public chains balance growth and stability, making Berachain a project worth monitoring.

The speculative frenzy in the Solana ecosystem has clearly cooled down. Some high-profile failures have damaged market confidence, leading to a significant decline in trading volume on certain DEX platforms. Although such speculative assets will not completely disappear and can be viewed as digital collectibles, their peak frenzy may be over, 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.

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

The downturn in this field aligns with the views of a well-known project founder at Consensus 2025: "As the 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'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 Development

Ethereum L2 TVL decreased by 23.4% to $14 billion. Arbitrum remains in the lead with a TVL of $4.5 billion (down 33.4%), while Base climbs 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. A certain Layer 2 project will launch its mainnet on February 16, after its testnet has processed a cumulative total of 95 million transactions, positioning itself as a game changer in scaling performance, with several heavyweight institutions already on board. 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 Mobius mainnet launch on February 27 as the first SVM chain expansion of Solana attracted a lot of attention, achieving 10,000 TPS and bringing $47.6 million in funding to a certain DeFi platform 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 the need for Ethereum to clarify its position amidst growing competition. He advocated for Layer 2 to take a leadership role in scalability (such as a 17-fold increase in transactions) and interoperability, pointing out that they have evolved from "advanced multi-signatures" into a robust network. 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 within the ecosystem, calling for a focus on real value rather than speculative bubbles.

Financing Status

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 Q1 2025. Fluent Labs secured $8 million in funding to develop a multi-virtual machine Layer 2 that connects Ethereum and Solana.