A small group of crypto protocols is capturing an increasingly large share of industry revenue, according to ARK Invest research, highlighting a growing concentration of capital and users around a few dominant platforms.
Hyperliquid and Pump.fun alone account for 67% of crypto application-layer revenue, while adding Ethena brings the combined share of the three protocols to nearly 80%, according to Lorenzo Valente, director of digital assets research at ARK Invest.
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In his 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.
The trend comes as several crypto companies face increasing pressure, with recent developments including Storj’s Chapter 11 bankruptcy filing and operational shutdowns at firms such as BitMEX and BitMart.
Why Is Crypto App Revenue Becoming More Concentrated?
Valente’s analysis extends the concentration trend beyond applications into infrastructure, citing high revenue concentration across middleware and Layer 1 blockchains as well.
Revenue concentration is now at all-time highs across almost every layer, including apps, middleware, and Layer 1 blockchains.
The concentration comes as overall crypto application-layer revenue has weakened. ARK’s Q1 report estimated the sector generated approximately $485 million during the quarter, a 23% decline from the previous period.
Valente said declining 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 months ahead, with more mergers and acquisitions, additional bankruptcies, project closures, and competition for experienced talent likely to reshape the sector.
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 view increased concentration as a sign of reduced competition.
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.
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