Crypto industry consolidation: 2 projects own 67% of all app revenue, ARK warns

The crypto industry is entering a consolidation phase that goes deeper than anything seen in previous bear markets, according to ARK Invest researcher Lorenzo Valente. The warning isn’t abstract: capital is concentrating fast, weak projects are being flushed out, and the fallout — in the form of bankruptcies, shutdowns, and forced mergers — is only expected to intensify in the months ahead.

Key takeaways

• ARK Invest’s Lorenzo Valente says the current crypto industry consolidation is more severe than in any prior bear market cycle.
• Hyperliquid and PumpFun alone account for 67% of total application revenue across crypto; the top three projects including Ethena reach nearly 80%.
• Revenue concentration is high not just in applications but also across infrastructure and Layer 1 blockchains.
• Valente forecasts rising M&A deals, more bankruptcy filings, project shutdowns, and talent acquisition activity in the coming months.

Deepening Crypto Industry Consolidation

This isn’t the kind of market cleanup that follows a typical downturn. According to Valente’s analysis, the crypto industry consolidation now underway is structurally different — and more unforgiving — than what came before. Capital allocation is tightening sharply, and teams or exchanges that haven’t found product-market fit are exiting, not pivoting.

The implication is significant. In past cycles, even mediocre projects could survive on speculative momentum or fresh venture funding. That cushion has narrowed. What’s left is a market increasingly willing to distinguish between winners and everything else — and to let the latter fail.

The forces driving this are less about price action and more about structural fitness. Projects without real user demand or sustainable revenue models are finding no lifeline. That’s a market maturing in a way that compresses timelines for failure rather than extending them.

Revenue Concentration Across Key Crypto Sectors

The numbers make the consolidation story concrete. Across crypto applications, Hyperliquid and PumpFun together capture 67% of total application revenue. Add a third project — Ethena — and the top three account for nearly 80% of application revenue combined. That level of concentration leaves almost no room for smaller projects to compete on economics alone.

This isn’t isolated to the applications layer. Valente’s assessment, as reported by ARK Invest, notes that revenue concentration remains high across multiple sectors, including infrastructure and Layer 1 blockchains. The pattern is consistent: a handful of dominant players are capturing the vast majority of economic activity, while the long tail struggles.

For investors and developers alike, that kind of distribution raises a clear strategic question: how much of the remaining 20% of application revenue is sustainable, and how much is simply waiting to be absorbed or dissolved?

What Comes Next: M&A, Bankruptcies, and Talent Moves

Valente doesn’t stop at diagnosis. The ARK Invest researcher forecasts a wave of activity driven directly by this consolidation dynamic — and none of it is particularly gentle.

Specifically, Valente expects the following to increase in the coming months:

• Mergers and acquisitions as stronger players absorb distressed or undercapitalized rivals
• Bankruptcy filings from projects unable to sustain operations
• More project shutdowns as teams run out of runway
• Increased talent acquisition activity, with skilled developers and engineers moving to better-positioned organizations

The M&A angle is worth watching closely. When revenue is this concentrated, acquirers have strong incentives to buy rather than build — particularly for technology, user bases, or teams that would otherwise take years to develop organically. Talent acquisitions, sometimes called acqui-hires, often serve as a quieter mechanism for the same end: absorbing capability without the overhead of a full merger.

Bankruptcy filings and project shutdowns represent the harder edge of the same process. For the broader market, these aren’t necessarily negative signals — they’re the mechanism through which capital gets freed and redeployed toward projects that actually work. But for participants in those projects, the timeline is compressing fast.

Why This Cycle Feels Different

Previous bear markets in crypto tended to be survivable through patience. Teams would cut costs, reduce public activity, and wait for sentiment to shift. The current environment, as ARK Invest frames it, appears less forgiving of that strategy — not because prices are lower, but because product-market fit has become the decisive filter.

The revenue data reinforces this. When three projects command nearly four-fifths of an entire sector’s revenue, the remaining participants aren’t just underperforming — they’re structurally crowded out. That’s a different kind of pressure than a temporary bear market, and it suggests the consolidation Valente describes isn’t a phase to wait out. For the projects caught on the wrong side of that concentration, the coming months may determine whether they survive at all.

FAQ

What does ARK Invest say about the current phase of the crypto industry?

ARK Invest researcher Lorenzo Valente states that the crypto industry is undergoing a deeper consolidation than in previous bear markets, with concentrated capital allocation and market exits by teams lacking product-market fit.

Which crypto projects dominate application revenue according to the analysis?

Hyperliquid and PumpFun account for 67% of total application revenue, while the top three projects including Ethena make up nearly 80% of that revenue, according to ARK Invest’s research.

What trends does ARK Invest predict for the crypto market in the coming months?

ARK Invest forecasts increased mergers and acquisitions, higher bankruptcy filings, more project shutdowns, and greater talent acquisition activity as the ongoing consolidation continues to reshape the sector.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.