Crypto is in the middle of its most severe consolidation phase to date, according to Lorenzo Valente, a research associate at ARK Invest. In an analysis published Wednesday on X, Valente argued that revenue across the industry is concentrating into a shrinking number of dominant protocols, a shift he says is setting the stage for a wave of mergers, acquisitions, and shutdowns.
The numbers behind the claim are stark. Valente found that perpetual futures exchange Hyperliquid and memecoin launchpad Pump.fun together account for roughly 67% of total crypto application revenue. Add in Ethena, the synthetic dollar protocol, and the top three alone capture nearly 80% of the industry's revenue pool, a level Valente describes as “record-high revenue concentration.”
What Concentration Looks Like in Practice
That level of concentration means the overwhelming majority of crypto protocols are competing for a small remainder of industry revenue, a dynamic that tends to squeeze out weaker or redundant platforms over time. Valente expects the trend to keep accelerating, predicting more mergers and acquisitions, Chapter 11 bankruptcies, project shutdowns, and acqui-hires as the field narrows around the protocols capturing the bulk of activity.
Recent exchange closures already point in that direction. BitMEX announced a September shutdown following a strategic review by its owner, HDR Global Trading. BitMart is ending trading services on August 26, 2026, with a full wind-down planned by January 2027. Meanwhile, Bybit has taken the acquisition route rather than retreating, picking up a majority stake in Indonesian firm NOBI to launch local exchange operations.
A Bullish Read on a Painful Process
Despite cataloguing what amounts to a shakeout across exchanges and protocols, Valente characterized the trend as “extremely bullish” for crypto's long-term prospects. The reasoning follows a familiar pattern from other technology cycles: as weaker or overlapping platforms exit, capital and users consolidate around the protocols that have proven they can sustain real revenue, potentially leaving the industry with a smaller but more durable set of market leaders.
Whether that consolidation plays out as smoothly as Valente suggests remains to be seen, particularly for smaller platforms without a clear path to differentiation. But with three protocols already commanding close to four-fifths of application revenue, the pressure on the rest of the field to merge, get acquired, or shut down looks unlikely to ease in the near term.
