What does "throw in the sponge" mean?

Also, throw in the towel. Give up, acknowledge defeat, as in I can't move this rock; I'm throwing in the sponge, or Bill decided to throw in the towel and resign from his job. This idiom comes from boxing, where formerly a fighter (or his second) conceded defeat by throwing the sponge or towel used to wipe his face into the ring. [c. 1900]