Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297427 
Year of Publication: 
2023
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2023-42
Publisher: 
Bank of Canada, Ottawa
Abstract: 
Decentralized finance (DeFi) is composed of a variety of heterogeneous sectors that are interconnected through an input-output network of its tokens. We first use a panel data set 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 employ a standard, theoretical production-network model to measure the value added and service outputs of the different DeFi sectors. Finally, based on a calibrated version of our model, we study which factors drive DeFi token prices and predict the equilibrium effects when network interconnectedness increases.
Subjects: 
Digital currencies and fintech
Payment clearing and settlement systems
JEL: 
G
G2
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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