Latest update on my natural sponge experience. After soaking my first natural sponge (yes, it was clearly a natural sponge..both labeled so and looked like it) for more than 3 weeks I filled up a 2 1/2 gallon tank with old aquarium water, put the sponges in there and added some pond snails (Physa sp.) and some trumpet snails. The snails immediatately went "frantic" (as frantic as snails can get) and started looking for a way out. The finally just retreated into their shells. Bad, bad sign. So, I took out the snails, put them into one of my aquaria and they went their way. One pond snail I had forgotten in the small experimental tank with the sponges died. So....I threw the sponge (rather the 3-4 pieces I had made out of the large one) away. This sponge was definitely a killer.
Luckily, I went to to another store (big arts and crafts and paints store) and purchased two more sponges. These sponges were packaged in a kind of net (as opposed to the see-through plastic packaging of my first sponge), so I could directly smell them. They had no chemical odor (which I wrongly identified as "spongy" odor prior in this thread) and were a dark, natural color. I was pretty sure that this time it would work. Since I like to experiment (within reason of course) and I was pretty sure that I had gotten the "right" sponge, I thoroughly rinsed the sponges under the tap, tore pieces out of the very large sponge, rinsed the piece thoroughly again, and directly dropped it into one of my shrimp tanks. The shrimp got positively excited (i.e. started picking around frantically) *immediately* and some of them went directly to the sponge to pick on it. The snails also took a liking to the sponge and started climbing around on it. I did not observe the frantic swimming (to get away) and the adverse color changes in the shrimp as I had with my previous sponge. It's been 3 days now and I have had absolutely no adverse observations whatsoever. I have now stuck sponges in all of my tanks and all shrimp reacted the same way to the sponges...positively. If everything continues to work out fine, this might actually turn out to be the most ingenious "tank decoration" idea yet in the shrimp hobby, far surpassing the leaf litter idea. Thanks for the idea Terran!
If you all wonder why I stuck the sponge in the shrimp tank immediately, I can say that the sponge will be colonized by micro-organisms and algae in the shrimp tank eventually, too. No need to stick it into a fish tank first. Obviously, as can be gathered from my reports, sticking the sponge in a fish tank first does not make the difference between "good" and "bad" sponge and life and death for the shrimp. Plus, I don't have any fish anymore, so I don't have the fish tank option anyway.
So, from my experience I can say that natural sea sponges can be put into tanks immediately after rinsing them thoroughly. No soaking of any kind required.
So, if you purchase a sponge, you should make sure that:
1. the sponge does NOT have a strong, chemical odor that transfers into the water it is soaked in and onto your hands
2. the water you soak the sponge in does not foam when you pour it.
Also, natural sponges that have *not* been treated or bleached tend to have a darker color (i.e. not bright yellow or whitish like artificial sponges tend to be). My first sponge was a bright color, but then I have seen Terran use some pretty bright looking sponges in his tanks, so bleaching by itself might not necessarily load the sponge with chemicals. There must have been some other processing going on with my first sponge for it to be loaded with chemicals and have that strong odor.
When purchasing, if you can't tell by the odor of the sponge if it's "ok" to buy or not (because it might be packaged in plastic instead of netting), then test the sponge in a small container with tank water and snails. If the snails continue behaving normally, the sponge should be ok for shrimp. If the snails "freak out" for a few minutes and then close up, then throw the sponge away and never buy that brand again. If you, for some reason, decided to test the sponge on your shrimp directly, make sure that you closely observe the shrimp's behavior. If the sponge is chemically treated, then the shrimp will start swrimming frantically after a few minutes, which means that they are trying to get away from the chemicals...i.e. they are looking for a way out of the tank. If a shrimp happens to land on such a sponge, then it will immediately zip away from it as if it had been shocked by electricity. If you have a suitable sponge, the shrimp won't display such behavior and may even start picking around more excitedly after putting the sponge in their tank.
Finally, natural sponges are sold under different names such as "sea wool sponge" and "sea grass sponge" etc.. These are actually different species of natural sponges. Sea wool sponges are more expensive than sea grass sponges, but both work just fine in a tank, so no need to buy the more expensive one if you have the choice. Terran is using "sea wool" and I am using "sea grass" and both work fine in a tank. They might have different rates of decay, but we won't know for sure until some time passes and we can report back on that issue. If everything works out fine with all of our sponges, I might make this post into an extended article. Once my camera batteries have recharged I will post some pictures of my newly purchased sponges both in the packaging, dry, wet and inside my tanks with shrimp sitting on them.
PS: I have changed the title of this thread to better reflect the topic of discussion. This will make it easier for people to recognize and take advantage of this thread in future searches.