A small group of crypto protocols is capturing an increasingly large share of industry revenue, according to ARK Invest research, underscoring a growing concentration of capital and users around a few dominant platforms.

Hyperliquid and Pump.fun together account for 67% of crypto application-layer revenue, and adding Ethena raises the combined share of the three protocols to nearly 80%, according to Lorenzo Valente, director of digital assets research at ARK Invest.

In a post on X, Valente said the crypto industry is entering what he described as its largest consolidation phase, as investors become more selective and projects without strong product-market fit struggle to survive.

“I believe Crypto is going through the biggest consolidation phase in its history, far more profound than in previous bear markets. The market structure has changed. Capital is much more selective, and teams and exchanges without real PMF are shutting down. Revenue concentration… pic.twitter.com/oY6pGSPV32 — Lorenzo ARK (@LorenzoARK) July 28, 2026”

“I believe Crypto is going through the biggest consolidation phase in its history, far more profound than in previous bear markets. The market structure has changed. Capital is much more selective, and teams and exchanges without real PMF are shutting down. Revenue concentration… pic.twitter.com/oY6pGSPV32”

The trend comes as several crypto companies face increasing pressure, including Storj’s Chapter 11 bankruptcy filing and operational shutdowns at firms such as BitMEX and BitMart, adding a concrete backdrop to the broader shift Valente described.

Why Crypto App Revenue Is Becoming More Concentrated

Valente said the concentration trend is not limited to applications, but is also visible across infrastructure, including middleware and Layer 1 blockchains.

“Revenue concentration is now at all-time highs across almost every layer, including apps, middleware, and Layer 1 blockchains,” he said.

The concentration comes as overall crypto application-layer revenue has weakened. ARK’s Q1 report estimated that the sector generated approximately $485 million during the quarter, down 23% from the previous period.

Valente said the decline in application-layer revenue suggests capital is concentrating among fewer platforms rather than spreading across the sector.

“Capital is much more selective,” he said, “and teams and exchanges without real PMF are shutting down.”

Expecting Broader Crypto Industry Consolidation

Valente expects the industry’s ongoing shakeout to accelerate in the coming months, with more mergers and acquisitions, additional bankruptcies, project closures, and competition for experienced talent likely to reshape the sector.

For crypto builders and investors alike, that makes the revenue mix more than a headline metric: it is also a signal of where usage and liquidity are concentrating across the stack, from apps to infrastructure. ARK Invest views this restructuring as a positive development for the long-term health of the crypto ecosystem, describing it as “extremely bullish for the space.”

Supporters of consolidation argue that it could remove weaker projects and allow stronger platforms to gain resources and market share. Critics, however, may see increased concentration as a sign of reduced competition.

The immediate watchpoint is whether the pattern ARK highlighted remains confined to a few standout protocols or broadens into more layers of the market as the current cycle matures.

Why This Matters

The shift could reshape the crypto landscape ahead of the next market cycle, with smaller projects facing pressure to merge, shut down, or find acquisition partners as investors become more selective.