The ARK Invest analyst says the cryptocurrency industry is entering what he believes is its largest phase of consolidation yet, with revenues increasingly concentrated in a few dominant protocols.
In a Wednesday post on X, Lorenzo Valente, a research associate at ARK Invest, said investors are becoming more and more selective, making it hard for cryptocurrency projects and exchanges without a sturdy product market fit to attract capital. As weaker projects struggle or are shut down, revenues are concentrated in a compact number of dominant protocols, he said.
As evidence, Valente said perpetual futures exchange Hyperliquid and memecoin startup Pump.fun account for about 67% of total crypto app revenue. Including the synthetic dollar protocol, Ethena increases the combined share of the three largest companies to almost 80%, highlighting what it described as record high revenue concentration across the sector.
Source: Lorenzo Valente
Valente added that he expects this trend to accelerate in the coming months, leading to more mergers and acquisitions, Chapter 11 bankruptcies, project closures and corporate takeovers. Despite the upheaval, he described the consolidation as “extremely bullish” for the crypto industry.
Related: ARK opposes a16z’s claim “TradFi wants blockchain, not DeFi.”
Stock closures add to the consolidation narrative
The comments come after several cryptocurrency exchanges announced plans to go out of business in recent days, underscoring growing pressure in various parts of the industry.
Last week, BitMEX announced that it would close its exchange in September following a strategic review by owner HDR Global Trading. The exchange recently accelerated the withdrawal of trading pairs and derivatives contracts, citing insufficient trading interest.
A few days later, BitMart announced that it would discontinue trading services on August 26 and then completely cease operations in January 2027. The exchange said the decision was made after reviewing operating conditions, market environment and future strategic direction.
Consolidation also took place through acquisitions. Earlier this month, Bybit launched a locally operated exchange in Indonesia after acquiring a majority stake in local digital asset company NOBI, expanding its presence in one of Asia’s largest cryptocurrency markets.
Source: BitMEX
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