When we met Sparkswap founder Trey Griffith early last year, we were surprised to learn he was behind swapready.net, a site we were familiar with as the best resource for making sense of which cross-chain atomic swap pairs were functionally ready. He was an impressive technical founder and clearly a domain expert.
Later that year, his focus and progress convinced us he was exactly the type of formidable founder we like investing in. We’re thrilled to be able to say we led Sparkswap’s seed round and are part of their mission to build a non-custodial cryptoasset exchange.
We at Initialized believe in the future of cryptoassets, and exchanges are core components of this growing industry. That thesis drove our early investment in Coinbase and their focus on building a best-in-class custodial consumer buying experience for cryptoassets.
However, modern exchanges can typically only do two of three things:
- They can support Bitcoin.
- They can be fast or high-performance.
- They can be non-custodial, which means that a customer doesn’t have to turn over their holdings to the exchange.
The most widely used exchanges today miss out on the third point, which is one of the core value propositions of cryptoassets — the ability to eliminate counter-party risk. Customers typically have to turn over their assets to a centralized entity, and therefore can’t trade in trustless environment. “If you don’t own your keys, you don’t own your Bitcoin,” has become something of a mantra in the community for good reason. Counter-party risk really matters to traders, especially those who need need to maintain large balances on exchanges to trade. Exchange breaches and loss of funds are all too common.
Although traders say they care a lot about reducing counter-party risk, it has been challenging to find a high-performance alternative that provides the speed and reliability of trades necessary for professionals. Full-time traders say they can’t accept degradation of performance or settlement times, and that’s where Sparkswap’s approach shines.
The beauty of Trey’s approach is that he can hit all three points. Sparkswap is committed to building a non-custodial exchange that meets the performance expectations of professional traders. They’ve succeeded in doing just that by leveraging the bleeding edge technology of atomic swaps on the Lightning Network.
Sparkswap performed their first swap between the Bitcoin and Litecoin main nets in January and we’re very excited about their beta launch this week which gives customers a chance to try the service. We look forward to seeing more trading pairs in the coming months.