February 2024 Public Chain Industry Research Report
DeFi takes off, Bitcoin Layer 2 rises prominently.Author: stella@footprint.network
Data Source: Footprint Analytics Public Chain Research Page
In February, the cryptocurrency market demonstrated a strong upward momentum, primarily driven by a significant increase in the value of Bitcoin and Ethereum, both rising over 45%. This optimistic trend also affected other tokens, with the top ten tokens all experiencing a growth of over 25%.
The blockchain data storage sector made significant progress, while multiple subfields within the blockchain space, such as AI, DePin, Web3 gaming, and Meme, showed clear rotation trends, particularly in the DeFi sector, where projects like Uniswap and EigenLayer led the industry's innovation.
Additionally, Ethereum's Layer 2 solutions, including Blast and Starknet, as well as the Bitcoin Layer 2 ecosystem led by Merlin Chain, achieved breakthroughs.
The data in this report comes from Footprint Analytics' Public Chain Research Page. This page provides an easy-to-use dashboard that includes the most critical statistics and metrics in the public chain space, updated in real-time.
Cryptocurrency Market Overview
The significant rise in the cryptocurrency market in February was driven by multiple factors. Among them, the U.S. spot Bitcoin ETF attracted up to $6 billion in inflows during February, highlighting investors' strong confidence in cryptocurrency as an effective store of value. Furthermore, market expectations for Ethereum's Cancun upgrade in March and Bitcoin's halving event in April further pushed prices higher. These factors collectively provided strong support for the rise in the cryptocurrency market.
However, broader market dynamics, such as inflation concerns and Federal Reserve policies, may pose challenges to sustained growth. The rise in inflation rates in February suggests that anticipated interest rate cuts in the U.S. may be delayed until later this year or even beyond, undoubtedly introducing uncertainty for the continued growth of the cryptocurrency market.
Public Chain Overview
As February came to a close, the total market capitalization of public chain cryptocurrencies soared to $1.9 trillion, marking a 42% increase compared to January. In this growth wave, Bitcoin, Ethereum, BNB Chain, and Solana undoubtedly played leading roles, with market shares of 64.0%, 21.4%, 3.3%, and 3.0%, respectively.
Data Source: Public Chain Token Market Cap Share - Footprint Analytics
Both Bitcoin and Ethereum exhibited significant growth. Bitcoin surged by 46.5%, closing at $62,404 at the end of the month, breaking the $60,000 mark for the first time since Q4 2021, just 9% shy of its all-time high. Ethereum performed even better, with a rise slightly exceeding Bitcoin at 48.1%, closing at $3,383 at the end of the month.
Data Source: Bitcoin and Ethereum Prices - Footprint Analytics
With the value of Bitcoin and Ethereum tokens increasing by over 45%, other tokens also showed strong performance. The average value increase of the top ten tokens exceeded 25%. Additionally, Arweave (AR) saw a particularly remarkable increase of 205.8%, while Stacks (STX) and Filecoin (FIL) achieved growth rates of 88.3% and 57.1%, respectively.
Data Source: Public Chain Token Market Cap and Prices - Footprint Analytics
In the past month, significant progress was made in the blockchain data storage field. 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 enhance the scalability of the blockchain through a modular architecture, promoting higher transaction throughput and parallel processing capabilities.
Additionally, the distributed storage network Filecoin announced on February 16 that it had completed integration with Solana. This collaboration aims to enhance the accessibility of historical data on Solana using Filecoin's infrastructure.
In terms of Total Value Locked (TVL), the public chain industry reached $97.7 billion by the end of February. Bitcoin's TVL soared to $2.05 billion, a 600% increase compared to January. This significant growth was primarily driven by advancements in Bitcoin Layer 2 technology and a surge in staking activities, particularly highlighted by the performance of the Merlin's Seal project.
Data Source: Public Chain TVL - Footprint Analytics
In February, the blockchain industry exhibited strong upward momentum, with rotations in sectors such as AI, DePin, Web3 gaming, Meme, and DeFi. The DeFi sector finally showed a strong recovery, with projects like Uniswap and EigenLayer performing exceptionally well.
On February 23, the Uniswap Foundation proposed a change to its fee mechanism to support UNI token holders. This initiative, known as the "fee switch," although somewhat controversial, sparked positive market reactions, driving up the value of UNI tokens and boosting the overall performance of the DeFi industry.
Moreover, the Ethereum project EigenLayer gained attention for introducing a restaking feature and received a $100 million investment from a16z Crypto. This funding injection helped EigenLayer's TVL surge to over $10 billion, placing it among the top three DeFi projects.
Layer 2
With the prosperity of the cryptocurrency market and the anticipation of a potential Ethereum ETF, Ethereum Layer 2 solutions saw significant growth in TVL. Arbitrum and Optimism continued to lead, with their TVL increasing by 31.1% and 22.1%, respectively.
Blast's TVL also achieved remarkable growth, soaring by 106.4% to reach $2.8 billion. The platform's Big Bang dApp competition was a tremendous success, greatly enhancing network activity and prompting some dApps to migrate from other blockchains to Blast. Furthermore, Blast has confirmed that its mainnet will officially launch on March 1.
Starknet launched its Provisions Program, which is the largest token airdrop event in the crypto space to date, significantly boosting the network's activity and increasing its TVL by nearly 900%.
Data Source: Ethereum Layer 2 Overview - Footprint Analytics
The Bitcoin Layer 2 ecosystem has become increasingly significant. In February, the rapid expansion of Merlin Chain successfully pushed Bitcoin's DeFi TVL past the $2 billion mark. This remarkable growth was primarily due to the popularity of the fair launch initiative Merlin's Seal. Meanwhile, Lightning Network, Stacks, and Rootstock also emerged prominently in Bitcoin Layer 2 solutions.
Additionally, a new wave of projects is making significant progress in the Bitcoin Layer 2 space, emphasizing compatibility with EVM smart contracts. This trend will greatly expand Bitcoin's use cases, moving beyond just payment functions. Projects such as Conflux, Bitfinity, and Botanix are leading this transformation, aiming to diversify applications and functionalities on the Bitcoin network.
Blockchain Gaming
The gaming rankings for February showed that Ronin, BNB Chain, and Polygon performed excellently in user activity, capturing 29.1%, 13.4%, and 13.1% of the market share, respectively. In terms of transaction volume, Ethereum, BNB Chain, and Ronin led the way, showcasing strong market performance.
Data Source: Public Chain Active Gamers Share - Footprint Analytics
Public chains are seizing growth opportunities through deep collaboration with content creators. Facing local regulatory challenges, Web3 game developers in South Korea are actively looking towards global markets to find broader development space for their blockchain games. Oasys stands out in this trend, providing not only a Layer 1 network but also launching a Layer 2 network based on Ethereum, offering diverse technical support for game developers. Recently, Oasys announced a strategic partnership with the well-known South Korean game developer Com2uS, followed by collaboration with Kakao's Web3 gaming division, Metabora SG.
Moreover, expanding the ecosystem through mutual growth between games and blockchain platforms is another strategy for public chains to achieve growth. The Web3 game Pixels migrated from Polygon to Ronin at the end of October 2023, fully leveraging Ronin's excellent interoperability and marketing support. This shift significantly enhanced the game's visibility and on-chain activity. In February alone, Pixels achieved over 1.5 million on-chain interactions, with user numbers approaching the milestone of 1 million. This growth trend undoubtedly had a positive impact on Ronin, highlighting the mutual benefits of their collaboration.
You can read the monthly report on blockchain gaming from Footprint Analytics for more insights into the gaming industry: "February Web3 Gaming Industry Dynamics: User Growth, Ongoing Challenges."
NFT
In February, Ethereum continued to dominate the NFT market, with a trading volume of $810 million, accounting for 97.1% of the total market trading volume. Although this figure decreased compared to January, Ethereum's market share slightly increased. Meanwhile, Polygon performed poorly, with its trading volume plummeting from $110 million in January to $20.4 million, causing its market share to sharply decline from 10.4% to 2.4%.
Data Source: Public Chain Monthly NFT Trading Volume - Footprint Analytics
The number of unique users on Ethereum (i.e., wallet addresses) decreased from 163,000 in January to 150,000 in February; however, its market share rose from 42.7% to 46.9%. Polygon's user count also declined to 129,000, leading to a drop in its market share to 40.4%. Meanwhile, the market share of BNB Chain grew moderately by 9.7%, with its user count reaching 31,000.
You can read the monthly report on NFTs from Footprint Analytics for more insights into the NFT industry: "February 2024 NFT Industry Dynamics: Cryptocurrency Surge, NFT Market Adjustment."
Public Chain Financing Situation
In February, the public chain industry experienced 11 financing events, successfully raising $150 million. Compared to January, there was a significant increase in both the number and scale of investments.
February 2024 Public Chain Financing Events
In the Layer 1 space, Flare secured $35 million in a private funding round led by Kenetic and Aves Lair. Flare positions itself as a data-centric network focused on advancing smart contract protocols and pricing oracles.
In the Ethereum Layer 2 space, Karak stood out with its Series A funding reaching $48 million, making it the largest financing event of the month. Karak launched a cutting-edge risk management framework targeting blockchain, Web3, and the global financial ecosystem. Additionally, Ethereum Layer 2 solutions like AltLayer and LightLink also successfully secured funding.
This momentum extended to Bitcoin Layer 2 platforms, with QED Protocol, Citrea, and Merlin Chain all receiving new investments in February. This indicates a growing market interest in Bitcoin scaling solutions.
Key Developments This Month
Sei Labs plans to launch the Sei V2 upgrade in the first half of 2024.
Web3 infrastructure provider Particle Network announced that its first Launchpad platform will introduce the token MERL from the Bitcoin Layer 2 network Merlin Chain.
The Bitcoin Cats project successfully launched the test network for its Bitcoin Layer 2 solution 1CAT Chain.
Layer 1 blockchain project Nibiru Chain plans to launch its public mainnet in March 2024.
The decentralized finance protocol Frax Finance successfully launched its Layer 2 solution Fraxtal, built on OP Bedrock and compatible with EVM.
The issuer of the stablecoin USDC, Circle, decided to stop supporting its stablecoin on the TRON blockchain.
The two blockchain projects Klaytn and Finschia announced plans to merge through the "Project Dragon" initiative in Q2 2023, aiming to create the largest Web3 network in Asia.
The content of this article is for industry research and communication purposes only and does not constitute any investment advice. The market carries risks, and investments should be made cautiously.
Footprint Analytics is a blockchain data solution provider. Leveraging cutting-edge AI technology, we offer the first no-code data analysis platform in the crypto space and a unified data API, allowing users to quickly retrieve over 30 public chain ecosystems' NFT, Game, and wallet address fund flow tracking data.
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