ARK Invest researcher Lorenzo Valente says crypto is entering its deepest consolidation phase, with revenue, capital, and talent flowing to a small set of winners while weaker firms face shutdowns, bankruptcies, and acquisitions.
- Revenue is concentrating fast. Valente says Hyperliquid and Pump.fun account for 67% of application revenue.
- The top end is getting heavier. Add Ethena, and the top three take almost 80%, according to his analysis.
- Failures are piling up. Storj filed Chapter 11, BitMEX is closing, and BitMart is winding down operations.
- Buying still beats dying. Kraken parent Payward is acquiring Magic Labs’ wallet business.
The message is blunt: crypto is thinning out. A few products are pulling in real revenue, while a long tail of projects is learning that hype is not a business model and “community” does not pay the bills.
Valente, ARK Invest’s director of digital assets research, said on July 28 that crypto is entering its “deepest consolidation phase.” He expects more mergers and acquisitions, Chapter 11 filings, shutdowns, and talent-focused acquisitions in the months ahead.
That view is backed by ARK’s own work. Its Q1 2026 DeFi report recorded application revenue falling 23% quarter-over-quarter to about $485 million across tracked protocols. In that report, Hyperliquid and Pump.fun generated about $145 million, Pump.fun about $123 million, and Axiom about $58 million. Together, those three applications accounted for roughly 67% of tracked application revenue through March 31.
That is a nasty level of concentration, but it also tells a familiar crypto story. When capital gets tighter, the market stops funding vague promise soup and starts rewarding products with actual users and actual money flowing through them.
Valente’s newer claim goes even further. He said Hyperliquid and Pump.fun alone generate 67% of application revenue, and that adding Ethena lifts the top-three share to almost 80%. That should be treated as his analysis, not as independently verified market-wide fact. The dataset, category definitions, and measurement period were not disclosed in the material provided.
That distinction matters. Crypto numbers love to disguise themselves. One dashboard’s “revenue” can be another dashboard’s fees, and those are not the same thing.
DefiLlama’s figures show why the plumbing matters. It records $37.46 million in 30-day protocol revenue for Hyperliquid, $20.32 million for Pump.fun, and $14.41 million in fees for Ethena. Ethena’s retained protocol revenue after costs is only about $42, 365. Fees, gross revenue, and retained revenue are not interchangeable, and sloppy comparisons can make a protocol look much healthier than it really is.
In plain English: one metric may show what users paid, another may show what a protocol brought in before costs, and another may show what was left after expenses. Mix them together and the picture gets muddy fast.
The contraction is showing up in real company failures too.
Storj Labs filed voluntary Chapter 11 proceedings on July 26 in the U.S. Bankruptcy Court for the Northern District of West Virginia under case 5:26-bk-00512. Chapter 11 is a U.S. bankruptcy process that lets a company reorganize under court supervision instead of going straight to liquidation. Storj said it plans to keep its storage network operating while addressing legacy obligations under court supervision.
That matters. Bankruptcy in crypto headlines often gets treated like a tombstone, when sometimes it is a restructuring tool with a lot of paperwork attached. Not glamorous, but better than pretending the runway is longer than it is.
BitMEX is heading for a harder end. The exchange said it will close on Sept. 23 after parent HDR Global Trading completed a strategic review. Users need to close positions and withdraw assets before then. If your platform has already announced its shutdown date, that is not a subtle hint. That is the market yelling at you through a megaphone.
BitMart is also winding down. Its official notice stopped new registrations and deposits from July 26, plans to end trading on Aug. 26, and says platform operations will cease on Jan. 31, 2027. That timeline gives users time to move, but not much reason to relax.
RootData’s 2026 dead-project archive adds more context, listing 99 projects that announced closures, entered bankruptcy, or remained unavailable for extended periods. That does not mean 99 insolvencies. It does show how much dead weight can pile up when a bull market sprays money across every half-baked idea with a token attached.
ZeroLend’s shutdown in February fits the same pattern. The project cited sustainability, liquidity, and operating risks. That is polite language for a rough truth: not every protocol survives long enough to justify the marketing budget.
Consolidation is not only about failures, though. It is also about strong players buying useful infrastructure before a competitor does.
On July 27, Payward, Kraken’s parent company, agreed to acquire Magic Labs’ wallet-as-a-service business. The deal will add embedded, non-custodial wallets to Payward Services. In practical terms, that means a larger platform is buying wallet infrastructure that lets businesses integrate wallet features without building them from scratch, while keeping users in control of their own keys.
The acquired infrastructure has supported more than 60 million wallets, over $10 billion in stablecoin volume, and about 200, 000 developers, according to the deal announcement. Financial terms were not disclosed, and the companies expect the acquisition to close within weeks, subject to customary conditions.
That is the other side of the squeeze. The market does not just kill weak businesses; it also strips out useful tech and folds it into stronger platforms. Sometimes that is healthy. Sometimes it is a sign that smaller teams can no longer survive without being swallowed by a larger balance sheet.
The pattern is familiar to anyone who has watched a crypto cycle before. In the boom, capital floods in, projects multiply, and every founder claims to be building the future of finance, identity, storage, or whatever else sounds good on a pitch deck. Then liquidity tightens, users get picky, and the market asks the one question that actually matters: who is making money, and who is just burning it?
Right now, the answer looks rough for the second group.
ARK’s view goes beyond one corner of the market. Valente said revenue concentration has also reached record levels across applications, middleware, and Layer 1 networks. Layer 1 networks are base blockchains like Bitcoin or Ethereum, while middleware refers to infrastructure software that sits between apps and those base chains.
That claim is directionally believable, but the exact numbers still depend on methodology. And in crypto, methodology is the whole game. Fees are not profit. Gross revenue is not retained revenue. Application revenue is not total volume. A dashboard can tell the truth and still mislead you if you do not know what it is measuring.
Key questions and takeaways
-
Is crypto really consolidating?
Yes. Revenue is concentrating in a handful of winners, and the market is seeing more shutdowns, restructurings, and acquisitions. -
Are the 67% and almost 80% figures settled facts?
No. Those numbers come from Lorenzo Valente’s analysis and should be treated as claims tied to ARK’s methodology, not independently verified market-wide stats. -
Why do the metrics matter so much?
Because fees, gross revenue, and retained revenue are different things. Mixing them together can make a protocol look stronger or weaker than it really is. -
Does Chapter 11 mean a crypto company is finished?
Not always. Chapter 11 is a restructuring process, and Storj says it intends to keep its storage network running while it works through legacy obligations. -
Is consolidation only bad news?
No. The Payward, Magic Labs deal shows that strong players are still buying useful infrastructure, which can speed up product development and improve wallet UX for users.
The uncomfortable truth is that crypto’s cleanup may be overdue. The market does not need more hollow projects, zombie exchanges, or teams living on fumes. It needs products with real demand, real revenue, and a reason to exist after the hype cycle moves on.
That does not make the current leaders untouchable. Hyperliquid, Pump.fun, and Ethena may be winning now, but crypto leadership is often temporary and attention is a fickle little beast. For the moment, though, the money is saying what the marketing departments never will: the bar is rising, and the weak are being sorted out.
For more context on the broader market narrative, ARK’s BIG IDEAS 2026 framework offers a useful look at how the firm is thinking about digital assets, AI, and other frontier technologies.
That broader lens also helps explain why projects like Ethena, Pump.fun, Hyperliquid: Leading the Next Altcoin keep showing up in revenue discussions, even as smaller names fall off the map. In crypto, attention is cheap, but durable cash flow still does the heavy lifting.
There is also a regulatory shadow hanging over the winners. Hyperliquid faces FCA scrutiny as Wall Street eyes crypto, which is a polite way of saying success attracts the government’s favorite hobby: scrutiny with paperwork.
And if you want the colder, less sanitized version of the same pressure, Hyperliquid Faces Regulatory Pressure Over Crypto Perps: 5 lays out the uncomfortable paths forward for perpetual futures platforms trying to grow without stepping on every regulator’s landmine.
Valente also flagged more shutdowns ahead in a separate industry note, echoing ARK Invest Researcher Predicts More Crypto Shutdowns. Whether that proves prophetic or just painfully obvious, the signal is the same: the easy money era is over, and the market is done babysitting bad ideas.
