Public chain industry research report in February 2024: DeFi takes off, Bitcoin Layer 2 emerges suddenly

Data source: Footprint Analytics public chain research page

In February, the cryptocurrency market showed a strong upward momentum, with the prices of Bitcoin and Ethereum rising sharply by more than 45%. This optimistic situation has also affected other tokens, with the top ten tokens all seeing over 25% growth in value.

The field of blockchain data storage has made significant progress. At the same time, multiple sub-fields in the blockchain field, such as AI, DePin, Web3 games and Meme, have obvious rotation trends, especially the DeFi sector. Projects represented by Uniswap and EigenLayer have led industry innovation.

In addition, Ethereum’s Layer 2 solutions, including Blast and Starknet, as well as the Bitcoin Layer 2 ecosystem led by Merlin Chain, have made breakthroughs.

The report data is taken from the public chain research page of Footprint Analytics. This page provides a convenient dashboard that contains the most important statistical data and indicators in the public chain field, with real-time update capabilities.

Crypto Market Overview

The apparent rise in the cryptocurrency market in February was driven by a combination of factors. Among them, the U.S. Spot Bitcoin ETF attracted a whopping $6 billion in inflows during the month, a figure that highlights investors’ strong confidence in cryptocurrencies as an effective store of value. In addition, market expectations for the Ethereum Cancun upgrade in March and the Bitcoin halving event in April have further pushed prices higher. Together, these factors provide strong support for the cryptocurrency market’s rise.

However, the continued growth of the cryptocurrency market also faces some challenges, such as market volatility and regulatory uncertainty. Although cryptocurrencies have gained widespread attention and recognition over the past few years, their prices remain volatile, leaving investors concerned about market trends. In addition, the attitude of regulators towards the cryptocurrency industry may also affect the development of the market. Although some countries have begun taking steps to regulate the cryptocurrency market, many uncertainties still exist, which may have a negative impact on the growth of the market. Additionally, the cryptocurrency market is also affected by macroeconomic factors. Rising inflation may lead to investment

Public Chain Overview

As February comes to an end, the total market capitalization of public chain cryptocurrencies has soared to $1.9 trillion, compared to a In March, the increase was as high as 42%. In this wave of growth, Bitcoin, Ethereum, BNB chain and Solana have undoubtedly played a leading role, with their market shares reaching 64.0%, 21.4%, 3.3% and 3.0% respectively.

<img src="https://img.php.cn/upload/article/000/465/014/171124238811467.png" alt="2024年2月公链行业研报：DeFi腾飞，比特币Layer 2异军突起">​数据来源：公链代币市值占比 - Footprint Analytics

Both Bitcoin and Ethereum are showing significant growth. Among them, Bitcoin rose strongly, rising by as much as 46.5%, closing at $62,404 at the end of the month, breaking the $60,000 mark for the first time since the fourth quarter of 2021, and only 9% away from its all-time high. Ethereum performed even more impressively, slightly outperforming Bitcoin with a gain of 48.1%, closing at $3,383 at the end of the month.

<img src="https://img.php.cn/upload/article/000/465/014/171124238838266.png" alt="2024年2月公链行业研报：DeFi腾飞，比特币Layer 2异军突起">​数据来源：比特币及以太坊价格 - Footprint Analytics

Led by more than 45% growth in the value of Bitcoin and Ethereum tokens, other tokens also showed strong performance. The average value of the top ten coins increased by more than 25%. In addition, Arweave (AR) saw a particularly significant increase of 205.8%, while Stacks (STX) and Filecoin (FIL) also achieved increases of 88.3% and 57.1% respectively.

数据来源：公链代币市值和价格 - Footprint Analytics

Over the past month, significant progress has been made in the field of blockchain data storage. On February 14, the distributed data storage solution Arweave officially launched Arweave AO and plans to launch a test network by February 27. Arweave AO will improve the scalability of the blockchain through a modular architecture, thereby promoting higher transaction throughput and parallel processing capabilities.

In addition, the distributed storage network Filecoin announced the completion of integration with Solana on February 16. The partnership aims to increase the accessibility of Solana’s historical data using Filecoin’s infrastructure.

In terms of TVL, the public chain industry ended February at $97.7 billion. Among them, Bitcoin’s TVL soared to $2.05 billion, a 600% increase from January. This significant growth is mainly due to the advancement of Bitcoin Layer 2 technology and the boom in staking activity, especially the Merlin's Seal project.

数据来源：公链 TVL - Footprint Analytics

In February, the blockchain industry showed a strong upward trend, with sections such as AI, DePin, Web3 games, Meme and DeFi rotating. The DeFi sector has finally made a strong recovery, with projects such as Uniswap and EigenLayer performing well.

On February 23, the Uniswap Foundation proposed a proposal to adjust its fee mechanism to support UNI token holders. Although this move, known as the "fee switch", was somewhat controversial, it still triggered The positive response from the market has promoted the increase in the value of UNI tokens and boosted the overall performance of the DeFi industry.

In addition, Ethereum project EigenLayer has attracted much attention for introducing a re-staking function and received a $100 million investment from a16z Crypto. This capital infusion helped EigenLayer’s TVL jump to over $10 billion, placing it among the top three DeFi projects.

Layer 2

With the boom in the cryptocurrency market and anticipation of a potential Ethereum ETF, Ethereum Layer 2 solutions have experienced significant growth in TVL. Among them, Arbitrum and Optimism continued to lead, with their TVL increasing by 31.1% and 22.1% respectively.

Blast’s TVL also saw impressive growth, surging 106.4% to $2.8 billion. The platform’s Big Bang dApp competition was a huge success, significantly boosting network activity and prompting some dApps to migrate to Blast from other blockchains. Additionally, Blast has confirmed that its mainnet will be officially launched on March 1st.

Starknet has launched its Provisions Program, the largest token airdrop in crypto to date, giving the network a huge boost in activity, boosting its TVL by nearly 900%.

数据来源：以太坊 Layer 2 概览- Footprint Analytics

The Bitcoin Layer 2 ecosystem cannot be ignored anymore. In February, Merlin Chain’s rapid expansion successfully pushed Bitcoin’s DeFi TVL past the $2 billion mark. This significant growth is largely driven by the popularity of Merlin Chain’s fair launch event, Merlin’s Seal. At the same time, Lightning Network, Stacks and Rootstock are also emerging as Bitcoin Layer 2 solutions.

Additionally, a new wave of projects are making significant progress within Bitcoin’s Layer 2 space, all emphasizing compatibility with EVM smart contracts. This development trend will greatly expand the use of Bitcoin, making it no longer limited to payment functions. Projects like Conflux, Bitfinity, and Botanix are leading this change, working to diversify applications and functionality on the Bitcoin network.

Blockchain Games

The February game rankings show that Ronin, BNB Chain and Polygon performed well in terms of user activity, occupying 29.1%, 13.4% and 13.1% of the market share respectively. In terms of transaction volume, Ethereum, BNB chain and Ronin are at the forefront, showing strong market performance.

数据来源：公链活跃游戏玩家占比- Footprint Analytics

Public chains are seizing growth opportunities through in-depth cooperation with content creators. Facing local regulatory challenges, South Korea's Web3 game developers are actively looking to the global market to find broader development space for their blockchain games. As a leader in this trend, Oasys not only provides Layer 1 networks, but also launches Layer 2 networks based on Ethereum to provide game developers with diversified technical support. Recently, Oasys announced a strategic cooperation with Com2uS, a well-known Korean game developer, and later joined forces with Metabora SG, the Web3 game division of Korean Internet giant Kakao.

In addition, expanding the ecosystem through mutual growth between games and blockchain platforms is another measure for public chains to gain growth. Web3 game pixels will be migrated from Polygon to Ronin at the end of October 2023, taking full advantage of Ronin's excellent interoperability and marketing support. This shift has significantly increased the game’s popularity and on-chain activity. In February alone, Pixels achieved more than 1.5 million on-chain interactions and approached the 1 million user milestone. This growth trend has undoubtedly had a positive impact on Ronin as well, highlighting the mutual benefits brought about by the cooperation between the two parties.

NFT

In February, Ethereum continued to hold the top spot in the NFT market, with its transaction volume reaching $810 million, accounting for 97.1% of the entire market transaction volume. Although this number is down from January, Ethereum’s market share has increased slightly. At the same time, Polygon's performance was not satisfactory. Its trading volume fell sharply to $20.4 million from $110 million in January, and its market share shrank sharply from 10.4% to 2.4%.

数据来源：公链月 NFT 交易量 - Footprint Analytics

The number of unique users of Ethereum (i.e. the number of wallets) fell from 163,000 in January to 150,000 in February. Despite this, its market share increased from 42.7 % rose to 46.9%. Polygon's user base also declined, falling to 129,000, causing its market share to drop to 40.4%. At the same time, the BNB chain’s market share grew modestly by 9.7%, with its number of users reaching 31,000.

Public chain investment and financing situation

In February, a total of 11 financing events occurred in the public chain industry, successfully raising US$150 million. Compared with January, both the number and scale of investments showed significant growth.

<img src="https://img.php.cn/upload/article/000/465/014/171124238941660.png" alt="2024年2月公链行业研报：DeFi腾飞，比特币Layer 2异军突起">​2024 年 2 月公链融资事件

In the Layer 1 space, Flare has raised $35 million in a private funding round led by Kenetic and Aves Lair. Flare positions itself as a data-centric network focused on promoting the development of smart contract protocols and pricing oracles.

In the field of Ethereum Layer 2, Karak performed particularly well. Its Series A financing amounted to US$48 million, becoming the largest financing event of the month. Karak launches a cutting-edge risk management framework for blockchain, Web3, and the global financial ecosystem. Additionally, Ethereum Layer 2 solutions like AltLayer and LightLink have also successfully received funding.

This momentum also extends to Bitcoin Layer 2 platforms, with QED Protocol, Citrea and Merlin Chain all receiving new investments in February. This shows the market’s growing interest in Bitcoin scaling solutions.

This month’s key news

• Sei Labs plans to launch the Sei V2 upgrade in the first half of 2024.

• Web3 infrastructure service provider Particle Network announced that its first Launchpad platform will introduce the token MERL of the Bitcoin Layer 2 network Merlin Chain.

• Bitcoin Cats project successfully launched the Bitcoin Layer 2 solution 1CAT Chain test network.

• Layer 1 blockchain project Nibiru Chain plans to launch the public mainnet in March 2024.

• Decentralized finance protocol Frax Finance successfully launched its Layer 2 solution Fraxtal, which is built on OP Bedrock and is EVM compatible.

• Circle, the issuer of stablecoin USDC, has decided to stop supporting its stablecoin on the TRON blockchain.

• Klaytn and Finschia, two major blockchain projects, announced that they will merge through the “Project Dragon” plan in the second quarter of 2023, aiming to create Asia’s largest Web3 network.

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