The cryptocurrency industry is entering its largest consolidation phase to date, with revenue concentrating among a small group of dominant protocols, according to ARK Invest research associate Lorenzo Valente.

In a Wednesday post on X, Valente said investors have grown increasingly selective, making it difficult for crypto projects and exchanges lacking strong product-market fit to attract capital. As weaker projects falter or shut down, revenue is funnelling toward a limited number of leading protocols.

Valente pointed to perpetual futures exchange Hyperliquid and memecoin launchpad Pump.fun as evidence, noting that together they generate approximately 67% of total crypto application revenue. When synthetic dollar protocol Ethena is included, the top three protocols capture nearly 80% of combined revenue — what Valente described as record-high revenue concentration across the sector. The figure marks a stark shift for an industry that began with an ethos of decentralization and has cycled through multiple waves of rival platforms since its inception.

He expects the trend to intensify in the coming months, driving more mergers and acquisitions, Chapter 11 bankruptcies, project shutdowns, and acqui-hires. The forecast follows earlier rounds of industry attrition, including the 2022 collapse of FTX and subsequent regulatory enforcement actions in the United States, which already pushed numerous lenders, exchanges, and token projects out of the market. Despite the upheaval, Valente characterized the consolidation as “extremely bullish” for the crypto industry, a stance consistent with ARK Invest's long-running thesis that digital assets will see sustained adoption.

Exchange Closures Reinforce Consolidation Trend

Several crypto exchanges have recently announced plans to wind down operations, highlighting intensifying pressures across parts of the industry.

Last week, BitMEX confirmed it would close its exchange in September following a strategic review by owner HDR Global Trading. The exchange had recently accelerated the delisting of trading pairs and derivative contracts, citing insufficient trading interest. Once among the highest-volume crypto derivatives venues, BitMEX has seen its market position erode as newer platforms expanded offerings.

Shortly afterward, BitMart announced it would end trading services on August 26 before fully winding down operations in January 2027. The exchange said the decision followed a review of its operating conditions, market environment, and future strategic direction.

Consolidation is also occurring through acquisitions. Earlier this month, Bybit launched a locally operated exchange in Indonesia after acquiring a majority stake in local digital asset firm NOBI, expanding its footprint in one of Asia's largest crypto markets. The move reflects a broader pattern in which larger exchanges are pursuing licensing and local partnerships to enter regulated jurisdictions while smaller venues retreat.