Sparkswap, the Lightning Network-powered Bitcoin exchange that launched last April, has been forced to shut up shop following unsustainable user numbers. The project attracted millions of dollars in funding, including $3.5 million from Pantera Capital, but has now become one of the many to fall by the wayside as investor numbers dwindle once more following the recent global market crash.
We’ve made the tough decision to shut down Sparkswap. Effective today, we won’t be accepting new users or new USD deposits. Existing users will have until 3/24/20 to make any final BTC purchases.
To learn more, read here: https://t.co/EW1Bwq4GAN
— Sparkswap (@sparkswap) March 17, 2020
Sparkswap Hampered by Accredited Investor Status
Sparkswap was a completely decentralized exchange powered by Bitcoin’s Lightning Network that utilized cross-chain atomic swaps, meaning that users were able to enjoy near-instant transactions without having to deposit to the exchange.
Work on the exchange began two years ago, with the initial launch coming in April of 2019 and an expansion into fiat purchases of Bitcoin five months later. However, as it was a US-based project it was only open to accredited investors which proved to be a handicap too large to overcome. Writing on the project’s Medium page, sparkswap founder Trey Griffith explained the difficulties the project had encountered:
Unfortunately, we weren’t able to build a large enough audience to sustain the business over the long term. Building a cryptocurrency business, especially one that interacts with the fiat banking system, is an expensive endeavor, and as it stands right now the style of self-custody we were espousing is too niche to make our business sustainable.
Griffiths added that he hoped that the project was simply ahead of its time:
Our sincere hope is that we were simply too early, and in a few years a service like Sparkswap will overtake custodial exchanges. But as Howard Marks said, “being too far ahead of your time is indistinguishable from being wrong.”
As the crypto space matures and decentralized services become more and more in demand, don’t be surprised to see sparkswap being resurrected, or similar services taking up its mantle.