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Are base layer blockchains establishing a new sector? Evidence from a connectedness approach

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  • Lee, Geul
  • Ryu, Doojin

Abstract

This study explores whether layer-1 blockchain platforms are evolving into an independent sector within the blockchain industry. We employ time-varying parameter and quantile vector autoregressive connectedness approaches to examine the return connectedness among the native tokens of layer-1 blockchain platforms and a comparison group. Our empirical results reveal a strengthening return connectedness among layer-1 native tokens, contrasting with observations from the comparison group. Layer-1 blockchain platforms are becoming more closely related over the sample period and may be progressing toward the establishment of an independent sector. Our findings highlight a growing need to investigate the connectedness of assets within the cryptocurrency market to better understand its structure and determine which cryptocurrencies can be grouped into sectors.

Suggested Citation

  • Lee, Geul & Ryu, Doojin, 2025. "Are base layer blockchains establishing a new sector? Evidence from a connectedness approach," Research in International Business and Finance, Elsevier, vol. 73(PB).
    • Handle: RePEc:eee:riibaf:v:73:y:2025:i:pb:s0275531924004471
    DOI: 10.1016/j.ribaf.2024.102654
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    Keywords

    Layer-1; Blockchain; Cryptocurrency; Connectedness; Spillover; Tokenization;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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