Market Dominance: The Core Split
The simplest way institutional investors look at the market is by separating Bitcoin from everything else. [1, 2]
Bitcoin (BTC): Serving as a global macro asset and digital store of value, Bitcoin commands a dominant 56% to 59% of the entire market share
2. Technical Layer Classification
From an infrastructure standpoint, the market is divided vertically based on where an asset lives and what role it plays in network operations: [1]
Layer 1 (L1) Blockchains: The underlying base networks that process and secure transactions natively. Examples include Bitcoin, Ethereum, Solana, and BNB Chain. [1, 2]
Layer 2 (L2) Scaling Solutions: Networks built on top of Layer 1 blockchains to lower transaction costs and increase speed. Examples include Arbitrum, Optimism, and Base. [1, 2]
Application-Layer Tokens: Digital assets created via smart contracts that operate inside a host blockchain rather than running their own network (e.g., ERC-20 tokens on Ethereum). [1, 2, 3]