Lightspark Sync: The Company Announces New Products and Features That Will Allow Users to Make Global Payments With Both Bitcoin and Fiat

The company announced that it has launched an alpha version of Spark, a Bitcoin Layer 2 that's interoperable with Lightning and that makes it cheaper

Lightspark, a Web3 payments company, announced new products and features at its first partner summit on Thursday.

The new products include Spark, a Bitcoin Layer 2 that’s interoperable with Lightning, and UMA Extend, a service that integrates the Lightning Network with traditional banking systems.

The company also announced new capabilities for UMA, its open-source and regulatory compliant payment solution. With UMA Auth, users can tip, pay subscription fees and make payments to merchants within apps.

Lightspark CEO David Marcus speaking at Lightspark Sync.

Announced at the event were an alpha version of Spark, a Bitcoin Layer 2 that’s interoperable with Lightning and that makes it cheaper to onboard users to a non-custodial Bitcoin layer, and new capabilities for UMA, the company’s open-source and regulatory compliant payment solution that makes sending money as simple as sending an email.

With UMA Extend, the Lightning Network can serve as a bridge between traditional banks globally, while with UMA Auth and UMA Request, UMA users can tip, pay subscription fees and make payments to merchants within apps.

Spark — Lightspark’s Bitcoin Layer 2

Spark is a Layer 2 protocol for Bitcoin that leverages statechain technology. In short, users can hold fractions of bitcoin off-chain, and transfer these by sending private keys to other users (rather than signing transactions with the keys).

Lightspark created Spark to better support the onboarding of users to the Lightning Network, which normally requires an on-chain transaction for each payment channel as well as the locking up of some amount of bitcoin in these channels so users can send and receive transactions.

The layer 2 was primarily borne from the frustration that the Lightspark team encountered in trying to create a non-custodial Lightning wallet for users.

“Self-custodial Lightning wallets, especially at scale, just aren’t viable,” Lightspark CTO Kevin Hurley told Bitcoin Magazine.

“If you are opening channels for billions of users, fees are going to go through the roof, and you're going to fill up block space. It's just something that's not going to be reasonable and you lock up liquidity for every single user,” he added.

Hurley also shared that Lightspark didn’t want to wait for the enabling of Bitcoin opcodes (like CheckTemplateVerify or TapleafUpdateVerify) that would make it cheaper to open new Lightning channels. Lightspark wanted to offer users a non-custodial option immediately.

So, they built Spark, a Bitcoin Layer 2 that offers users cheap, instant payments as well as a permissionless, unilateral exit to the Bitcoin base layer. It also enables offline receive, or the ability to receive bitcoin even when your device isn’t connected to the internet.

Besides statechains, Spark also utilizes atomic swap technology. Its design is similar to that of Mercury Layer in that it enables the off-chain transfer of ownership of Bitcoin UTXOs while benefiting from near instant and fee-free transactions, according to Hurley.

“Mercury has a lot of core limitations that we go beyond,” explained Hurley.

“In Mercury, for example, you can transfer whole UTXOs only. You have absolute time bombs where you have to go back on chain at some absolute time. So, you can only do so many transactions. Also, we pull in different pieces like connector transactions from Ark, for example, but, other than that, we're not similar to Ark at all,” he explained.

“I think it's hard to compare it to something, because it pulls in a lot of different components, and I think the trade-offs that we chose to make are different than many others probably chose to make.”

Besides bitcoin, it’s also possible to issue and use stablecoins on Spark. Or you can issue stablecoins via Taproot assets, LRC-20 or RGB on the base layer and transfer them to Spark.

A unique dimension of Spark, though, is that the assets on the layer 2 are all UMA enabled.

“You can now have non-custodial users sending directly to the bank accounts of UMA Extend users,” said Hurley, mentioning one of the new functionalities of UMA addresses.

Lightspark CTO Kevin Hurley speaking at Lightspark Sync.

UMA Extend

UMA Extend integrates the Lightning Network with traditional banking systems, allowing users to make international bank transfers in seconds. With this new technology, UMA Extend users can send any other UMA Extend user a near instant cross-border payment from one bank to another over Lightning as easily as sending an email.

“It’s designed to facilitate money movement across any currency,” Nicolas Cabrera, VP of Product at Lightspark, told Bitcoin Magazine. “I can be in Brazil sending my local currency, the Brazilian real, to a user based in Europe that wants to receive euros or someone in the US who wants to receive USD.”

The Brazilian reals leave the sender’s bank account, are converted into sats