Scientists have identified two major branches of prokaryotic evolution. What was the basis for dividing prokaryotes into two domains?

Genetic evidence like difference in ribosomal sequence.

Explanation:

Earlier archaea were considered in bacteria because of their similar appearance with bacteria. Other than similar appearance they also show other similarities with bacteria like lack of nucleus and membrane-bound organelle, presence of single chromosome, mode of reproduction, etc.

Carl Woese was the scientist who discovered archaea and made a separate domain for archaea. After the sequencing archaeal genome, he found that the gene sequence like rRNA sequence of archaea is not similar to bacteria and eukarya. So by genetic evidence, he divided prokaryotes into two domain bacteria and archaea.