Exploring the Emerging Bitcoin L2 Spark and Its Ecological Development

In the Bitcoin ecosystem, creating a new asset issuance protocol is not complicated, the real challenge is to form a sustainable community and project team. Recently, the Bitcoin ecosystem has once again set off a wave of new protocols, with many anonymous projects showcasing their own ideas, but in reality, most of them are only using inscription technology to repackage old concepts, lacking infrastructure, development support, and real user value.

However, in this opportunistic field, there are still serious teams. On May 20, Magic Eden, a well-known bitcoin ecological trading platform, announced an integrated cooperation with Spark, a new Bitcoin L2 solution, and plans to jointly hold an event on May 26. As an innovative Bitcoin scaling solution, Spark launched mainnet beta on April 29 and saw the birth of the first LRC20 token, FSPK, on May 8. Although the initial minting experience was not as good as it could have been, it still sparked a chase in the Bitcoin community. At present, the OTC price of the first batch of FSPK tokens has reached $12-20 per piece (1 lot = 0.001), which is at least a six-fold increase compared to the minting cost of about $2.

The collaboration between Magic Eden and Spark could herald the imminent launch of an on-chain marketplace for LRC20 tokens. In addition, Spark has also established partnerships with a number of projects, and the ecological prototype has emerged, and it is also backed by well-known venture capital institutions. Let’s take a closer look at Spark, the currently issued LRC20 tokens, and their ecosystem projects.

Spark: Bitcoin Native L2 Designed for Payments and Settlements

Spark claims to be a Bitcoin native L2 solution designed specifically for payment and settlement. However, in reality, it adopts an off-chain scaling solution, which differs from EVM-compatible chains or Rollup technology, as it does not support smart contracts and lacks a virtual machine. Spark allows users to conduct instant, low-cost, and unrestricted self-custody transactions of Bitcoin and other tokens (, including stablecoins ), off-chain, and achieves native interoperability with the Lightning Network, supporting the sending and receiving of tokens via the Lightning Network.

For the Bitcoin scaling scheme, users are most concerned about the security of funds, especially whether the Bitcoin can be safely and unhindered back to the mainnet after crossing the L2 layer. At present, there are only two operators in the Spark network: parent company Lightspark and Flashnet( officials said that more operators will be added in the future ). Theoretically, all transactions on Spark must be jointly authorized by at least one operator and user in order to be successfully executed, and this design does have potential risks - if both operators fail at the same time, the security of user funds could be threatened.

However, even as an off-chain scaling solution, Spark still retains its non-custodial and Bitcoin-native nature. Spark’s core technology is a Bitcoin-based shared signature protocol that runs on a distributed ledger without the need for an additional consensus mechanism. Users’ Bitcoin deposits are mapped directly to Spark without any bridging or wrapping. At the same time, user funds remain non-custodial, and even if Spark operators disappear, try to censor, or refuse to cooperate, users can still unilaterally force withdrawals to the Bitcoin mainnet, thus ensuring the safety of funds.

Spark’s parent company, Lightspark, was founded by David Marcus, who previously served as president of a payments platform and vice president of messaging products for a social platform, and was also invited to participate in the inaugural Crypto Summit at the White House on March 8, 2024. In terms of financing, Lightspark completed a Series A financing of more than $170 million in May 2022, with the participation of a number of well-known investment institutions, and the lineup is quite strong.

On April 29 of this year, Spark launched its mainnet public beta, and core features such as sending and receiving Bitcoin, creating tokens, and Lightning Network interoperability are fully operational, allowing developers to build applications using Spark’s SDK.

In terms of network fees, users can enjoy zero fees for transactions within the Spark network, while depositing or withdrawing Bitcoin to/from Spark requires payment of a certain Bitcoin on-chain fee (. Officials stated that fees will start to be charged after 6-12 months ), and transferring Bitcoin from Spark to the Lightning Network incurs a 0.25% fee plus routing fees.

Although the official statement clearly indicates that Spark does not have a token and there are no plans for any airdrops or token issuance, shortly after the release of the Spark mainnet test version, the LRC20 token protocol was fully explored by the market.

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Spark Native Token Protocol LRC20

LRC20 is Spark’s native token protocol, which is scheduled to launch in the summer of 2024 and is compatible with both the Bitcoin mainnet and the Lightning Network, but is still in development and can only run on the Spark network.

LRC20 takes Bitcoin as the settlement layer, while Spark serves as the execution layer. Anyone can issue LRC20 tokens, but before issuance, a transaction must be broadcasted on the Bitcoin mainnet, embedding the token identifier and metadata ( name, supply, and decimal places ) into the OP_RETURN output. Once successfully broadcasted, the tokens can be minted on Spark.

It is worth noting that LRC20 does not support the fair issuance model, only the original issuance wallet can be minted after the token issuance, and other addresses can only obtain tokens through developer airdrops or distribution. At the same time, LRC20 supports freezing and burning operations, and the original issuing wallet can freeze tokens on any address, and the tokens held by the frozen address will be locked and cannot be received or sent unless unfrozen by the developer; However, the original issuing wallet can only burn the tokens held by its own address, and the burning operation is irreversible.

These characteristics indicate that LRC20 is actually designed for stablecoin issuance, granting the original issuance address greater power, but for other token holders, if the issuer does not relinquish freezing authority, it also hides centralization risks. In any case, several LRC20 tokens with strong consensus have already emerged in the market, but due to the need to use computer terminals for minting in the early stages and various operations by developers, the token situation is also relatively complex, which will be introduced separately below.

FSPK(8b93 ending ): The first LRC20 token

• Total supply of tokens: 21 coins
• OTC price: $12-$20 per ticket
• Public key: 02b1d59c286bb79b39d0b3f14dc2a532b1e97e5c32c6376caea41e0b8c39708b93
• Release Date: May 8

FSPK, which ends in 8b93 with a public key, is the first LRC20 token. The original total amount was planned to be 21 million, but due to the wrong setting of the project team, the final total was only 21 ( which was nicknamed “the worst developer in history” by the community ). Therefore, the current number of ( at the end of a FSPK)8b93 is 0.001 tokens, and the cost of a single mint is about 0.000021BTC( about $2 ).

Since LRC20 itself does not support fair minting, the entire minting process is essentially for users to transfer funds to the project team’s wallet, and then the project team manually distributes the tokens. It is estimated that the project team received a total of about 0.441 BTC(, which is about $47,187 ). Currently, the over-the-counter price of this FSPK is between $12-$20 per ticket.

FSPKS: Revised First Generation FSPK

• Total supply of tokens: 21 million coins
• OTC trading price: Not available
• Public key: 029e4d50f931c170e100c1b7129e353cddd69c8ae50bf274e7a68b05144ef8b55e
• Release date: May 12

This is also a token issued by the same team. In order to better support future DEX and AMM transactions, the project team announced the issuance of a new token FSPKS to replace the first generation of FSPK on May 21, and airdropped it to the original FSPK holders at a ratio of 1:1000. At the same time, the project team said that the old version of FSPK is no longer valid and will not appear in subsequent AMMs.

FSPK(6c82 ending )

• Total supply of tokens: 21 million coins
• OTC trading price: 4-10 USD/card (1 card = 1000 coins )
• Public key: 0374f5629ac68dbdf9600cc14c763b8be9f1ebb198b3c568b47f9811efbcf56c82
• Release date: May 11

Due to the difficulties encountered by users in minting the first-generation FSPK, such as the transaction could not be confirmed for a long time, the token was delayed, and the total number of first-generation FSPK was limited to only 21, another team airdropped the new token to the first 21,000 users who attempted to transfer the first-generation FSPK in chronological order, including those whose transactions were confirmed and those whose transactions were not confirmed. At present, its over-the-counter price is between $4-10 per piece, but the community consensus is relatively weak.

SAT

• Total supply of tokens: 210 trillion coins
• OTC trading price: Not available
• Public key: 02757529fa69b70e55cee583c03d58936c39fff134b83808745db1ff41c1603bdb
• Issue Date: May 11

SAT is likewise an airdrop by anonymous developers to all addresses that try to mint the first generation of FSPK. Continuing the tradition of a large number of SAT inscriptions, coupled with the feature of zero cost acquisition, this token has also attracted community attention, but there is no clear OTC price yet.

SNOW

• Total supply of tokens: 21 million coins
• OTC trading price: 19 USD/piece
• Public key: 0377abadfbab8cc1fd7382fab87835ab062fd72c3ae7662fa6b579210fca16cd59
• Release Date: May 17

SNOW was launched by the Spark ecosystem project sparksat, which is the first LRC20 token endorsed by a formal project party, so it has a relatively high community recognition. At present, its over-the-counter trading price is about US$19 per sheet, and the minting cost is only US$1 ( which is ) charged by the project party, and the price has increased by about 19 times.

Early Ecosystem Projects and Tools

The biggest difference between Spark and other fleeting new protocols is that, despite still being in the early stages, there are already some steadfast builders in its ecosystem, reminiscent of the early development trend of the BRC20 ecosystem. In addition to collaborating with Magic Eden, Spark has also established a partnership with the stablecoin protocol brale, planning to launch a stablecoin on Bitcoin; at the same time, it is working with the Web3 infrastructure provider Privy to help project parties build decentralized applications on Bitcoin.

The following are early projects and tools in the Spark ecosystem:

sparkscan

sparkscan is the block explorer for the Spark network, where users can enter a Spark network address to view token balances, transaction records, and other information. Users can also enter the token public key to view detailed data such as the number of token holders, total supply, and transaction history.

SparkSat

SparkSat is the first full-fledged web wallet tool on the Spark protocol, and it is also the project owner of the LRC20 token SNOW, which is not officially operated by Spark. Users can use SparkSat to view their assets by importing their seed phrases, and make deposits and withdrawals on the Bitcoin mainnet and transactions on the Spark and Lightning networks directly through its front-end interface. The tool also supports one-stop issuance of LRC20 tokens and viewing all LRC20 tokens, which can be said to be an all-round tool for the Spark protocol ecosystem.

Flashnet

Flashnet is one of the two major operators of the Spark protocol and the developer of the Spark browser sparkscan. In February 2024, Flashnet completed a $4.5 million seed funding round.

Flashnet is committed to building a permissionless, non-custodial, Bitcoin-native decentralized trading platform, with a potential future launch of the Spark ecosystem DEX. At the same time, it has partnered with the stablecoin issuance protocol brale to launch the Bitcoin stablecoin USDB.

With the continuous development of the Spark ecosystem, more innovative applications and tools are expected to emerge on this emerging platform, bringing more possibilities for the Bitcoin expansion ecosystem.