Decentralized digital currencies exchange Sparkswap has finally called it quits. The exchange claimed that despite their platform offering its users enhanced security, it was unable to bring in enough numbers. The shutdown comes just two years after the exchange launched and less than a year after it raised $3.5 million from Pantera Capital and other venture capital firms.
Sparkswap’s founder Trey Griffith stated that although the exchange’s platform introduced a new level of security for its users, it may have come before its time. Sparkswap allowed its users to trade in digital currencies in a self-custody environment, setting itself apart from the majority of exchanges which are centralized and hold the user’s digital currencies. Unfortunately, this wasn’t enough and the platform was unable to bring in the numbers, Griffith revealed in a blog post.
He wrote, “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.”
The San Francisco-based platform has ceased to register new users or accept BTC deposits effective March 17. The existing users can still purchase BTC for one more week, up until March 24 when the exchange will terminate all trading activity. Even after the termination of all activity, the users can still access their funds through AnchorUSD, Sparkswap’s banking partner. Griffith promised the users that they would not incur any fees for bank account redemptions via AnchorUSD until the end of April.
Sparkswap had been on an upward trajectory, going on to attract $3.5 million in a funding round led by Initialized Capital, Pantera Capital and others in April last year. At the time, the VCs sounded optimistic that the DEX would grow to compete with the centralized heavyweights. Brett Gibson, a partner at Initialized Capital marveled at how it had been able to offer self-custody without sacrificing speed. He remarked, “It has the performance and other characteristics of a decentralized exchange but can perform like a centralized one.”
But it wasn’t to be for Sparkswap. Despite this, the founder believes that self-custody is the future and that his startup had just arrived before 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,” he stated.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.