At Lightspark Sync, Lightspark's first partner summit on Thursday, the company announced new products and features that will allow users to make global payments with both bitcoin and fiat money.
The company announced that it has released an alpha version of Spark, a layer 2 of bitcoin that is interoperable with Lightning and makes it cheaper to onboard users to a non-custodial bitcoin layer.
The company also announced new capabilities for ONEthe 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 globally, while with UMA Auth and UMA Request, UMA users can tip, pay subscription fees, and make payments to merchants within the apps.
Spark: Lightspark bitcoin Layer 2
Spark is a Layer 2 protocol for bitcoin that leverages state chain technology. In short, users can keep fractions of bitcoins off-chain and transfer them by sending private keys to other users (rather than signing transactions with the keys).
Lightspark created Spark to better support onboarding users to the Lightning Network, which typically requires an on-chain transaction for each payment channel, as well as locking a certain number of bitcoins into these channels so users can send and receive transactions.
Layer 2 primarily arose from the frustration the Lightspark team encountered when trying to create a non-custodial Lightning wallet for users.
“Lightning wallets with self-custody, especially at scale, are simply not viable,” Lightspark CTO Kevin Hurley told bitcoin Magazine.
“If you are opening channels for billions of users, fees will skyrocket and you will fill block space. It is simply something that is not going to be reasonable and blocks liquidity for each user,” he added.
Hurley also shared that Lightspark didn't want to wait for bitcoin opcodes (like CheckTemplateVerify or TapleafUpdateVerify) to be enabled that would make it cheaper to open new Lightning channels. Lightspark wanted to offer users a non-custodial option right away.
So, they built Spark, a layer 2 of bitcoin that offers users instant and cheap payments, as well as a unilateral, permissionless exit to the base layer of bitcoin. It also allows for offline receiving or the ability to receive bitcoins even when your device is not connected to the internet.
In addition to state chains, Spark also uses atomic swap technology. Its design is similar to that of Mercury Layer in that it allows the transfer of ownership off-chain to bitcoin UTXO while benefiting from near-instant and free transactions, according to Hurley.
“Mercury has many fundamental limitations that we must overcome,” Hurley explained.
“On Mercury, for example, you can only transfer full UTXOs. You have absolute time bombs where you have to get back to the chain at some absolute time. Therefore, you can only make a certain number of transactions. In addition, we incorporate different pieces, such as connector transactions of Arkfor example, but other than that, we don't look like Ark at all,” he explained.
“I think it's hard to compare it to anything, because it incorporates so many different components, and I think the tradeoffs that we choose to make are different than probably a lot of others chose to make.”
In addition to bitcoin, it is also possible to issue and use stablecoins on Spark. Or you can issue stablecoins via Primary Root Assets, LRC-20 either tech/”>RGB on the base layer and transfer them to Spark.
However, a unique dimension of Spark is that all Layer 2 assets are UMA-enabled.
“You can now have non-custodial users send directly to UMA Extend users' bank accounts,” Hurley said, mentioning one of the new features of UMA addresses.
Expand UMA
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 easily as sending an email.
“It is designed to facilitate the movement of money in any currency,” Nicolas Cabrera, vice president 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 who wants to receive euros or to someone in the United States who wants to receive dollars.”
Brazilian reals leave the sender's bank account, are converted into sats by the bank (or an entity such as Zero hashif banks can't touch the cryptocurrencies), which are then received by the recipient's bank, which converts them back to euros, USD, or whatever currency the recipient has in their bank account. All of this happens in about 30 seconds, a dramatic change from the two to three days it typically takes for international money transfers to clear.
“This is the first time the Lightning Network has been connected to traditional banking routes and systems,” Cabrera added.
Extended uses of UMA Real Time Payments (RTP)which enables real-time payments for federally insured depository institutions in the United States and comparable services in other countries where UMA Extend is available. All US banks that use RTP support Extend. Currently, Lightspark partners support entry and exit paths for 44 fiat currencies in over 100 countries.
Traditional financial institutions involved in these transactions will set transaction fees, which tend to range between 0.25% and 0.5%, significantly cheaper than the 6.35% customers pay frequently make international remittance payments through traditional financial channels.
Those interested in using UMA Extend can do so through this link.
ONE authentication
At the event, Lightspark also introduced UMA Auth. The technology leverages OAuth (open authentication) technology (the backend technology for when a website gives you the option to sign in to a third-party app or website with Google or facebook), an open standard authorization protocol that gives users secure access to a website or application.
UMA Auth was built using Nostr Wallet Connection (NWC)a protocol developed by Alby's team. NWC now supports UMA features such as cross-currency transactions and customer application registration.
“We wanted to expand UMA's coverage beyond wallets to applications,” Shreya Vissamsetti, a 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 app. The idea is that it is very similar to OAuth, but for money,” he added.
“All you have to do is enter your UMA address and then we form a connection with your Lightspark wallet directly from the app. “That gives the app access to communicate with your wallet and deposit money directly from the app.”
UMA Auth allows users to do everything from tipping their favorite artists to paying a subscription fee to paying a friend through their preferred messaging app.
“Let's say I'm listening to Taylor Swift,” Vissamsetti began.
“I can link my UMA account and if my favorite song comes on, I can just touch a button and send a small tip,” he explained.
“Tipping is one of the main uses we are looking for with this product,” Cabrera said. “Rays are again a good base layer for us because they allow small quantities to be shipped.”
a request
UMA Request is another new dimension of UMA, allowing any UMA user to request a payment from another UMA user.
Merchants can use UMA Request to request payments via an invoice, presented in the form of a QR code, for the product sold or service provided. UMA Request also supports zero-sum invoices, through which invoice recipients can pay any amount they wish.
“Previously, with UMA, the sender initiated the payment, but we have reversed that,” Vissamsetti said.
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.
Moving forward
Lightspark CEO David Marcus, former president of PayPal, believes it is only a matter of time until more banks and platforms adapt new technologies such as UMA Extend, UMA Auth and UMA Request.
“At the end of the day, if you build a more efficient network that allows global money movements to move faster, cheaper, in real time 24/7, without blackout dates, then that is where the money and the financial system will flow and the actors in the ecosystem will simply have to adapt to that,” Marcus told bitcoin Magazine.
Regarding Spark, the Lightspark team is looking for user feedback on how to improve the product.
“We're going to fully engage with the community,” Hurley said.
“We want this to be completely open, completely open source. “Anyone can audit it and create their own versions if they wish,” he added.
“We want this to be something collaborative where the community comes together, where they hopefully submit pull requests and help find things they want to improve.”
Christina Smedley, co-founder and director of marketing and communications at Lightspark, echoed Hurley's sentiment while discussing the new capabilities of Spark and UMA.
“We're trying to (incorporate) the next billion or a couple billion,” Smedley told bitcoin Magazine, “so it's really important that what we do is open source and community-led.”
