Square CEO Jack Dorsey has announced that the company is forming a new division dedicated to developing decentralized finance services based on Bitcoin.
Dorsey made the announcement on Twitter, saying that Square's new division will create an open developer platform with the sole objective of making it easier to construct noncustodial, permission free and decentralized financial services.
A company of Square's stature aiming to create simple DeFi services on Bitcoin might potentially increase adoption and bring more competition to Ethereum-based DeFi.
The Bitcoin network currently lacks smart contract capability, making it difficult to compete with Ethereum-based DeFi and its interoperable 'Money Legos.' To launch smart contracts, decentralized finance on Bitcoin requires additional infrastructures such as bridges and sidechains.
Dorsey named engineer Mike Brock as the division's director. Brock formerly oversaw a development team that was working on integrating Bitcoin functionality for the Cash App back in 2018. Brock has experience with open source projects as a result of his employment with Red Hat Inc., an enterprise open source solutions provider.
The San Francisco-based digital payments company has three business lines: Cash App, Square Seller products and the music-streaming service Tidal, which it bought earlier this year. Dorsey has long sought to expand Square into a larger organization with a lot of autonomous entities.
Dorsey has also been a backer of Bitcoin, and Square said last month that it is developing a hardware wallet for the cryptocurrency. In February, the business also disclosed that Bitcoin currently accounts for 5% of its holdings.
DeFi on Ethereum has exploded in 2021 and according to Dune Analytics, the DeFi user base (as measured in terms of unique addresses) has grown from 1.1 million at the start of January to around 3 million in July.