Crypto Industry Enters 'Winner-Takes-All' Phase as Revenue Concentrates in Few Protocols

The crypto industry is undergoing its most profound consolidation phase in history, according to Ark Invest analyst Lorenzo Valente. As investors become increasingly selective, projects and exchanges without a clear product-market fit are struggling to attract capital, leading to a concentration of revenue in a small number of protocols.

Valente pointed out that the top three crypto applications - Hyperliquid, Pump.fun, and Ethena - account for approximately 80% of total crypto application revenue. He expects this trend to accelerate over the next few months, with an increase in mergers and acquisitions, project closures, and acqui-hires aimed at securing talent.

Recent cases of exchanges halting operations include BitMEX's decision to close its exchange in September, citing insufficient trading demand, and BitMart's announcement that it will end trading services on August 26 and then begin procedures for a full operational shutdown in January 2027. Bybit has also acquired a majority stake in Indonesian digital asset firm Noby and launched an exchange operated locally in Indonesia.

Valente believes that this consolidation phase is driven by the changing market structure, where capital is much more selective, and teams and exchanges without real product-market fit are shutting down. He notes that revenue concentration is deepening, and attention will focus on how quickly mergers and acquisitions and operational shutdowns increase in the process.