Old English sponge, spunge, from Latin spongia "a sponge," also "sea animal from which a sponge comes," from Greek spongia, related to spongos "sponge," of unknown origin. "Probably a loanword from a non-IE language, borrowed independently into Greek, Latin and Armenian in a form *sphong-" [de Vaan]. The Latin word is the source of Old Saxon spunsia, Middle Dutch spongie, Old French esponge, Spanish esponja, Italian spugna.
In English in reference to the marine animal from 1530s. To throw in the sponge "quit, submit" (1860) is from prizefighting, in reference to the sponges used to cleanse the faces of combatants between rounds (compare later throw in the towel). Sponge-cake is attested from 1808.
adjective suffix, "full of or characterized by," from Old English -ig, from Proto-Germanic *-iga- (source also of Dutch, Danish, German -ig, Gothic -egs), from PIE -(i)ko-, adjectival suffix, cognate with elements in Greek -ikos, Latin -icus (see -ic). Originally added to nouns in Old English; used from 13c. with verbs, and by 15c. even with other adjectives (for example crispy). Adjectives such as hugy, vasty are artificial words that exist for the sake of poetical metrics.
<a href="https://www.etymonline.com/word/spongy">Etymology of spongy by etymonline</a>
Harper, D. (n.d.). Etymology of spongy. Online Etymology Dictionary. Retrieved $(datetime), from https://www.etymonline.com/word/spongy