Hangzhou Xuanji Technology was founded on 9 October 2005. Shen Leping, born in 1973 and a packaging engineering graduate of Shanghai University, became its chief producer and director in 2006, then its chairman.

In 2007 the studio launched Qin's Moon (秦时明月), a 3D wuxia saga set under the Qin dynasty, inspired by Wen Shiren's unfinished novel. Its polished style made it an instant hit, and it became one of donghua's longest series.

Sparkly Key then developed other franchises, such as Wu Geng Ji and Nine Songs of the Moving Heavens (天行九歌), and made major adaptations for Tencent and Bilibili such as Soul Land 2 and Tales of Herding Gods, the latter in Unreal Engine 5.

Sparkly Key defined the aesthetics of 3D wuxia: elegant characters, choreographed fights, detailed historical settings. The studio controls the whole chain, from creation to books, merchandise and video games, which lets it keep its franchises alive for decades.