At Lightspark Sync, Lightspark’s first partner summit on Thursday, the company announced new products and features that allow users to make global payments using both bitcoin and fiat.
The company announced that it has launched an alpha version of Spark, a Bitcoin Layer 2 that is interoperable with Lightning and makes it cheaper to give users access to a non-custodial Bitcoin layer.
The company also announced new capabilities for Athe company’s open-source, regulatory-compliant payment solution that makes sending money as easy as sending an email.
With UMA Extend, the Lightning Network can serve as a bridge between traditional banks worldwide, while UMA Auth and UMA Request allow UMA users to 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 uses statechain technology. Basically, users can keep fractions of bitcoin off-chain and transfer them by sending private keys to other users (instead of signing transactions with the keys).
Lightspark created Spark to better support user onboarding to the Lightning Network, which typically requires an on-chain transaction for each payment channel, as well as locking a certain amount of bitcoin in these channels so users can send and receive transactions.
Layer 2 came primarily from the frustration the Lightspark team encountered when creating a non-custodial Lightning wallet for users.
“Self-managed Lightning wallets, especially at scale, are simply not viable,” Lightspark CTO Kevin Hurley told Bitcoin Magazine.
“If you open channels to billions of users, costs will skyrocket and fill up the block space. It’s just something that’s not reasonable and you’re tying up liquidity for every single user,” he added.
Hurley also mentioned that Lightspark didn’t want to wait to enable Bitcoin opcodes (like CheckTemplateVerify or TapleafUpdateVerify) that would make it cheaper to open new Lightning channels. Lightspark wanted to immediately provide users with a no-custody option.
That’s why they built Spark, a Bitcoin Layer 2 that offers users low-cost, instant payments, as well as a permissionless, one-sided exit to the Bitcoin base layer. It also enables offline receiving, or the ability to receive bitcoin even when your device is not connected to the internet.
In addition to statechains, Spark also uses atomic swap technology. The 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-instantaneous and cost-free transactions, Hurley said.
“Mercury has a lot of core limitations that we are moving past,” Hurley explains.
“For example, in Mercury you can only transfer entire UTXOs. You have absolute time bombs where you have to go back on the chain at an absolute time. So you can only carry out a limited number of transactions. We also extract various pieces, such as connector transactions Arkfor example, but otherwise we are nothing like Ark,” he explained.
“I think it’s hard to compare it to anything because it has a lot of different components, and I think the tradeoffs we’ve made are different than many others.”
In addition to bitcoin, it is also possible to issue and use stablecoins on Spark. Or you can spend stablecoins via Taproot assets, LRC-20 or RGB on the base layer and transfer it to Spark.
However, a unique dimension of Spark is that the assets on layer 2 are all UMA compliant.
“You can now have non-custodial users send directly to UMA Extend users’ bank accounts,” says Hurley, pointing out one of the new features of UMA Addresses.
UMA extension
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 via Lightning, as easy as sending an email.
“It is designed to facilitate the movement of money in any currency,” Nicolas Cabrera, VP Product at Lightspark, told Bitcoin Magazine. “I can send my local currency in Brazil, the Brazilian Real, to a user in Europe who wants to receive Euros or to someone in the US who wants to receive USD.”
The Brazilian reals leave the sender’s bank account and are transferred by the bank (or an entity such as Zero hashif the banks can’t get crypto), which are then received by the recipient’s bank, which converts it back into euros, USD or whatever currency the recipient has in their bank account. All this happens in about thirty seconds, a radical shift from the two to three days it often takes for international money transfers to be processed.
“This is the first time the Lightning Network will be connected to traditional banking routes and banking systems,” Cabrera added.
UMA Extend use Real-time payments (RTP)which enables real-time payments for federally insured depository institutions in the United States, and similar services in the other countries where UMA Extend is available. All banks in the US that use RTP support Extend. Currently, Lightspark’s partners support on-ramps and off-ramps for 44 fiat currencies in more than 100 countries.
The traditional financial institutions involved in these transactions will set the fees for the transactions, which are typically between 0.25% and 0.5% – significantly cheaper than the 6.35% customers pay often to make international money transfers via traditional financial rails.
Those interested in using UMA Extend can do so via this link.
ONE Auth
During the event, Lightspark also introduced UMA Auth. The technology uses OAuth (Open Authentication) technology (the backend technology for when a website allows you to log in to a third-party app or website with Google or Facebook), an open-standard authorization protocol that provides users with secure provides access to a website or application.
UMA Auth is built using Nostr Wallet Connect (NWC)a protocol developed by Alby’s team. NWC now supports UMA features such as cross-currency transactions and client app registration.
“We wanted to expand UMA’s coverage from wallets to applications,” Shreya Vissamsetti, member of the Lightspark engineering team working on UMA, told Bitcoin Magazine.
“UMA Auth is a new extension on top of UMA that allows you to integrate payments directly into an application. The idea is that it’s a lot like OAuth, but for money,” she added.
“All you have to do is enter your UMA address and we will connect to your Lightspark wallet directly from the application. That gives the app access to communicate with your wallet and bring in funds directly from the application.
With UMA Auth, users can do everything from tipping their favorite artists to paying a subscription fee or paying a friend through their favorite messaging app.
“Say I’m listening to Taylor Swift,” Vissamsetti began.
“I can link my UMA account, and when my favorite song plays, I can just tap a button and send her a super little tip,” she explained.
“Tipping is one of the key uses we are pursuing with this product,” Cabrera said. “Lightning is again a good base layer for us because you can send small quantities with it.”
A request
UMA Request is a new dimension of UMA, which allows any UMA user to request a payment from another UMA user.
With UMA Request, merchants can request payments via an invoice, in the form of a QR code, for the product sold or service provided. UMA Request also supports zero-sum invoices, which allow invoice recipients to pay any amount they wish.
“Previously at UMA, the sender initiated the payment, but we reversed it,” said Vissamsetti.
Another notable feature of UMA Request is that it ensures that both parties involved in the transaction receive a record of the transaction.
UMA Request makes purchasing items online – especially across borders – easier and cheaper than using credit cards.
Come on
Lightspark’s CEO David Marcus, the former president of PayPal, believes it is only a matter of time before more banks and platforms adopt new technologies such as UMA Extend, UMA Auth and UMA Request.
“If you ultimately build a more efficient network that allows global money movements to move faster, cheaper and in real time 24/7 without blackout dates, then that’s where the money is going to flow and the financial system and the ecosystem players will simply find themselves there have to adapt to,” Marcus told Bitcoin Magazine.
As for Spark, the Lightspark team is looking for user feedback on how they can improve the product.
“We are going to be fully engaged with the community,” Hurley said.
“We want to make this completely public, completely open source. Anyone can audition it and make their own versions of it if they want,” he added.
“We want this to be a collaborative project where the community gets involved, where they hopefully submit pull requests and help find things they want to improve.”
Christina Smedley, co-founder and Chief Marketing and Comms Officer at Lightspark, echoed Hurley’s sentiment when discussing the new features of both Spark and UMA.
“We’re trying to get the next billion or a few billion,” Smedley told Bitcoin Magazine, “so it’s really important that what we do is open source and community-led.”