Crypto industry watchers are increasingly pointing to revenue concentration as a sign that the market is moving into a new phase of consolidation—one where only a few protocols can command a disproportionate share of application earnings.
In a Wednesday post on X, Lorenzo Valente, a research associate at ARK Invest, argued that investors have grown more selective, channeling capital toward projects and platforms with clear product-market fit while leaving weaker offerings to struggle, shut down, or be absorbed.
Key takeaways
- ARK Invest’s Lorenzo Valente says crypto is entering a “biggest consolidation phase yet,” driven by more selective capital allocation.
- Valente cites that Hyperliquid and Pump.fun account for about 67% of total crypto application revenue.
- Including Ethena’s synthetic dollar protocol, the top three capture nearly 80% of application revenue, indicating record concentration.
- Valente expects the trend to intensify, with more mergers, bankruptcies, shutdowns, and acqui-hires likely in the months ahead.
- Recent exchange wind-down announcements reinforce the broader narrative that not all platforms can withstand current market pressures.
Why revenue concentration is becoming the center of gravity
Valente’s core thesis is that consolidation is no longer just about user growth or brand dominance—it’s increasingly about where revenue accrues. According to his post, the industry is witnessing an accelerating shift toward a small set of “dominant protocols,” while projects that fail to demonstrate strong traction find it harder to raise funds or sustain operations.
To illustrate the point, Valente highlighted two platforms—Hyperliquid, a perpetual futures exchange, and Pump.fun, a memecoin launchpad—claiming they together generate roughly 67% of total crypto application revenue. He further said that when Ethena is included, the combined share of the top three rises to nearly 80%, underscoring what he described as record-high concentration across the sector.
The practical implication for market participants is straightforward: when revenue becomes clustered, competition intensifies for everyone else. New entrants and smaller platforms face an uphill battle—not only to attract users, but to earn the kind of sustained cash flow that tends to draw institutional attention and deepen liquidity.
A consolidation cycle that may look like closures and dealmaking
While Valente acknowledged the disruption that such concentration can bring, he framed the shakeout as potentially constructive for the broader ecosystem. He expects the trend to accelerate, predicting more mergers and acquisitions as well as operational outcomes such as Chapter 11 bankruptcies, project shutdowns, and acqui-hires.
That outlook matters for investors because it reframes “risk” from being purely price-driven to being increasingly structural: business models, revenue quality, and sustainable demand may determine survival more than short-term promotional cycles. For founders and teams, it suggests that consolidation could translate into fewer independent routes to scale—and more emphasis on being acquired, integrated, or acquired talent through acqui-hire arrangements.
At the same time, it remains uncertain how quickly the consolidation will play out across all categories of crypto infrastructure. Valente’s argument hinges on revenue dominance at the application layer, but the industry could still experience pockets of strong growth outside the top performers depending on regulation, product innovation, and changes in user behavior.
Exchange wind-downs add weight to the consolidation narrative
Valente’s remarks arrive as several exchanges have announced plans to wind down operations—developments that echo his broader consolidation claim by showing pressure on parts of the trading ecosystem.
Last week, BitMEX said it would shut down its exchange in September following a strategic review by its owner, HDR Global Trading. The exchange reportedly accelerated delisting of trading pairs and derivative contracts, citing insufficient trading interest before the decision to close.
In a separate case, BitMart announced it would end trading services on Aug. 26 and then wind down fully in January 2027. The company said the move was based on a review of operating conditions, the market environment, and its future strategic direction.
Beyond closures, consolidation is also showing up through acquisitions and expansion. Earlier this month, Bybit launched a locally operated exchange in Indonesia after acquiring a majority stake in NOBI, a move aimed at strengthening its footprint in one of Asia’s largest crypto markets. That contrast—some platforms exiting while others consolidate through expansion—reflects a market that is sorting winners and losers, rather than evenly distributing momentum.
What investors and builders should watch next
If Valente’s concentration thesis holds, the most important near-term signal may not be announcement volume, but measurable shifts in application revenue share—especially whether the top protocols keep expanding and whether additional platforms climb into the dominant tier. At the same time, the industry will be watching for the next wave of exchange and project restructurings to see how broadly consolidation affects liquidity, custody, and trading access for users.
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