A tetracarbonyl cyclobutene dihydrate compound, having a chemical formula (I). A method of synthesizing the tetracarbonyl cyclobutene dihydrate compound, includes: a synthesis step, a separation step, and a purification step. The synthesis step includes: collecting and dissolving 0.5728 g of squaric acid, 2.7948 g of ammonium formate, and 0.0480 g of the palladium complex in 100 mL of anhydrous methanol, heating and stirring a resulting mixture to reflux for 48 hrs, and stopping the reaction. The separation step includes: performing column chromatography analysis on reaction products according to a volume ratio of dichloromethane to anhydrous methanol of 8:2, to obtain a target product. A method of using the tetracarbonyl cyclobutene dihydrate compound, includes: using tetracarbonyl cyclobutene dihydrate compound as a catalyst in addition reaction between ethyl pyruvate and nitromethane, where a conversion rate of ethyl pyruvate reaches 96.1%.