Sparkswap, a decentralized exchange backed by Pantera Capital, announced it is shutting down on March 17. The exchange cited a weak user base as the catalyst for its decision to cease operations.
The platform has shut its doors to new customers and will put an end to all trading services after March 24. The exchange will also terminate its Lightning node before April.
Sparkswap unable to attract enough users to sustain operations
Sparkswap users’ U.S. dollar funds will remain in accounts held with the exchange’s banking partner AnchorUSD. Users can either leave the funds in an AnchorUSD account or withdraw to their own bank account.
In a blog post, Sparkswap’s founder Trey Griffith stated that the exchange was unable “to build a large enough audience to sustain the business over the long term,” adding:
“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.”
Sparkswap code is open source
Sparkswap was founded in 2017, and was built on the Lightning Network in a bid to create a decentralized exchange with comparable execution speeds to centralized platforms through the use of atomic swaps.
The exchange also launched a desktop application allowing Bitcoin purchases “without sacrificing self-custody.”
Looking forward, Griffith states that he hopes Sparkswap was simply too early, and that “in a few years a service like Sparkswap will overtake custodial exchanges.”
He adds that most of the code that built the company’s products are open-source, encouraging other developers to build on their technology.
Despite announcing its closure, Sparkswap is still advertising to hire software engineers.
During April 2019, Sparkswap raised $3.5 million including participation from crypto venture heavyweights Initialized Capital, Pantera Capital and Polychain.
Paradigm Labs ceases operations
Decentralized finance (DeFi) project Paradigm Labs, also backed by Polychain, announced that it would stop operating on March 11.
The startup, which previously sought to create a decentralized exchange, stated that despite two years of research and development, it had failed to build a “market-fit” product.
“Out of respect to all of our stakeholders, we assessed this situation as quickly as we believed we could responsibly do and converged on the decision to sunset the company,” the post added.