For years, the crypto industry has thrived at the pace of fundraising and the proliferation of projects. This mechanism now seems to be coming to an end. Capital is now concentrated on a limited number of actors, while the most fragile initiatives gradually disappear. This redistribution of investments marks a turning point for the Web3 ecosystem. On the social network X, Lorenzo Valente, associate researcher at ARK Invest, believes that the sector has entered what he describes as “the greatest phase of consolidation” of its history.
In brief
- The crypto industry is going through its biggest phase of restructuring, driven by increased investor selectivity.
- Three protocols (Hyperliquid, Pump.fun and Ethena) alone capture nearly 80% of the market’s application revenue.
- Historical platforms like BitMEX and BitMart are ending their activities due to lack of sufficient volumes.
- ARK Invest perceives this necessary purge as an essential remediation towards a mature and sustainable ecosystem.
A concentration of revenues for the benefit of dominant protocols
The decentralized applications market is observing a polarization of financial flows without precedent in the history of cryptos, while the president of the SEC has just given his official support to the CLARITY Act. Lorenzo Valente, research analyst at ARK Invest, points out that investors are now exhibiting extreme selectivity, making capital capture particularly difficult for projects lacking proven product-market fit. This allocative rigor has the direct consequence of marginalizing fragile initiatives and concentrating the financial value generated at the top of the pyramid.
To support this observation, the researcher highlights statistical data particularly revealing on the sharing of value:
- Hyperliquid and Pump.fun: the perpetual futures exchange and memecoin launch platform alone capture around 67% of the overall revenue recorded by all crypto applications;
- Ethena: the integration of this synthetic dollar protocol in the calculation brings the cumulative share of the first three players to almost 80% of the sector’s total application revenue.
This financial hegemony illustrates a radical change in behavior among users and providers of capital. The scarcity of liquidity pushes market players towards infrastructures capable of demonstrating immediate profitability and an autonomous economic model. As secondary entities struggle to maintain operations, leaders in each niche benefit from a cumulative network effect.
Lorenzo Valente anticipates a marked acceleration of this trend in the coming months. According to the analyst, this movement will translate concretely into an increase in mergers and acquisitions, an increase in bankruptcy procedures, the outright closure of numerous projects as well as buyouts targeting only talented teams.
The surge on exchanges and the restructuring of the crypto market
The uncertainty caused by this selectivity affects centralized exchanges, forced to make drastic arbitrages. Thus, BitMEX has formalized the complete shutdown of its exchange for the month of September, a decision taken by its parent company HDR Global Trading following a strategic review. The firm had previously accelerated the delisting of trading pairs and derivative contracts due to a clear lack of interest from traders.
In the same vein, BitMart announced that it would end its trading services on August 26 before a total cessation of its operations set for January 2027, citing the reassessment of its operating conditions and its competitive environment. At the same time, the recomposition of the market is taking place through targeted acquisitions, like Bybit which established itself in Indonesia after taking a majority stake in the local company NOBI.
This forced rationalization reveals the inability of mid-sized exchanges to compete in the face of liquidity requirements and operational costs. According to on-chain data, the drop in activity on secondary assets is suffocating the profitability of historical players in derivative finance. The gradual disappearance of entities that have not reached a critical size demonstrates that seniority no longer guarantees economic survival. This severe sorting forces companies to abandon the frenetic race for expansion to concentrate on solvent regional markets and acquisitions of existing infrastructure.
Structural consolidation with positive repercussions for the sector
Despite the severity of the shutdowns and the turbulence experienced by struggling businesses, Lorenzo Valente calls this phase of major consolidation an extremely bullish dynamic for the future of the crypto industry.
This position is based on the principle that a purge of unviable projects redirects capital towards solid and truly value-creating protocols. Eliminating speculation and excessive fragmentation allows leading infrastructures to strengthen their balance sheets and improve their level of service.
Ultimately, this tightening of the ecosystem transforms the very nature of the crypto market by bringing it closer to the standards of traditional financial markets. The end of financing without economic compensation and the domination of protocols generating real cash flows lay the foundations for sustainable growth. If this transition imposes painful readjustments in the short term for fragile players, it constitutes an essential guarantee of credibility to attract institutional investors on financial bases that have finally been rehabilitated.
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