Square CEO and bitcoin bull Jack Dorsey said on Twitter late Thursday that the company is "focused on building an open developer platform with th

Square is building a decentralized finance business using bitcoin

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2021-07-16 15:00:05

Square CEO and bitcoin bull Jack Dorsey said on Twitter late Thursday that the company is "focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services."

Decentralized finance, or DeFi, applications are those that don't rely on centralized authorities like banks, but instead use blockchain-based smart contracts to execute transactions. Most are being built on the Ethereum blockchain.

DeFi applications allow for financial transactions that are more easily accessible, efficient, and relatively low cost. They've also been highly attractive to yield seekers who can generate returns between about 15% and 30% by participating in the DeFi ecosystem – by "locking" capital in smart contracts.

"DeFi platforms function similarly to traditional banks and financial services companies and could pose a disruption risk in the coming years," Needham's John Todaro said in a recent report focused on the DeFi opportunity. "In the current yield starved environment, there has been an increased demand for DeFi platforms which offer significantly higher yields than traditional financial products."

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