In my experience, sponges need low/no light and high flow. If possible, I'd recommend moving your daisy cutter to a low/medium light area that has low flow. Before you do that, remove the piece of rock entirely from the water and scrub with a toothbrush in the air. Maybe use hydrogen peroxide with the toothbrush if you avoid getting any on the coral. Exposure to air kills sponges. If you can't move the rock, I think the only things you can do include trying to selectively starve the sponge (I don't know how to do that) or buy fish that eat sponge. Good luck!
