Decentralized finance (DeFi) is made up of a variety of heterogeneous sectors interconnected via an input-output network of its tokens. We first use a panel dataset to empirically document the evolution of the DeFi network across its different sectors. Instead of looking at the misleading measure of total value locked, we then use a standard theoretical production network model to measure the added value and services of different DeFi sectors. Finally, based on a calibrated version of our model, we study which factors determine DeFi token prices and predict equilibrium effects as network interconnectivity increases.
