Wet Sponge

The wet sponge is a variant of the sponge block that lacks its water-removing property. When placed, it emits water droplets from its sides and bottom, similar to the way any other block emits the droplets from the bottom when water is directly above it.

Obtaining
Ocean monuments have a chance of spawning with a room containing wet sponges. The Elder Guardian drops a wet sponge when killed by the player.

Drying
Wet sponges can be dried in a furnace in the same way as smelting other items.

When smelted, an empty bucket in the 'fuel' slot will fill and become a water bucket after the sponge is dried. This happens for empty buckets placed by the player while the furnace is still smelting, and also for empty buckets left by lava buckets. This means that if you smelt a wet sponge with a lava bucket, both items will turn into other items- the wet sponge will turn into a regular sponge, and the lava bucket will turn into a water bucket. This is not the most ingenius way to farm water though, as you could just make an infinite 2x1x2 source.