🤔 What is Theta Network ?
Theta Network is a blockchain-based decentralized peer to peer video delivery network. It allows users to use their spare computing resources and internet bandwidth to relay videos to viewers. Viewers enjoy improved video stream quality and users earn TFuel tokens.
📝 Origin of Theta network
- Mitch Lou and Jieyi Long founded theta.tv, a live streaming platform in Sep 2015.
- They realized that they were not able to stream high-quality video content even after spending millions of dollars on CDNs.
- The team conceived and planned to launch Theta network to overcome the challenge.
- They raised $20 million by selling 30%( 300 million theta tokens) of the total supply(1 billion theta tokens) to kickstart the project in 2017.
- Theta network was first launched on Etherium mainnet as ERC-20 token. Subsequently, the team launched theta blockchain in March 2019.
- The team launched guardian nodes, two-layer consensus mechanism in May 2020.
- They added smart contract capabilities and NFT support on Theta blockchain in July 2021. Developers can use smart contracts to build dapps on Theta blockchain that:
- Enforce digital copyrights.
- Transparent royalties payment.
- Crowdfunding mechanisms.
- Digital ownership.
- Payment-consumption models.
- Attended the Massachusetts Institute of Technology in 1988.
- Graduated with a Bachelor of Science degree in Computer Science and Engineering in 1992.
- Did MBA from Stanford Graduate School of Business in 2004.
- Cofounded Tapjoy in 2007. And worked as its vice president until 2010.
- Cofounded Gameview Studios in 2010 and sold to DeNA, a gaming company in Japan.
- He co-founded Theta.tv in 2015 and Theta network in 2017.
- He is the Chief executive officer of Theta project.
- Bachelor of Science in microelectronics from Peking University in 2006.
- Ph.D. in computer engineering from Northwestern University in 2010.
- He cofounded MadSkill game studios(Mobile game engine) in 2014.
- Cofounded theta.tv in 2015 and Theta network in 2017.
- Currently, he is CTO of the Theta project.
😌 What problems does it solve ?
Traditionally video streaming platforms deploy CDNs(Content delivery networks) to deliver videos to viewers. However, it is not possible for platforms to deploy CDNs at every place in the world. As a result, people living away from CDNs get a bad viewing experience.
Moreover, the video streaming experience deteriorates as more and more viewers join the platform and load on CDNs increases.
Theta network overcomes this problem by incentivizing users to relay the videos using spare computer resources and internet bandwidth. As a result, the efficiency of network improves as more and more users join the network.
Video platforms do not have to guess and buy CDN resources in advance to cater for uncertain eventualities. Theta network dynamically allots the required resources as per demand and charges the platforms accordingly
Viewers living in far-flung areas and poor neighborhoods with no CDNs get good video streaming experience using Theta network.
Developers can also deploy smart contracts on Theta blockchain to:
- Distribute royalties automatically in a transparent way.
- Enforce copyright protection.
- Build Dapps etc.
- Validator and guardian nodes are responsible for minning and finalizing new blocks on Theta blockchain.
- These nodes have to stake Theta token to become validator and guardian nodes:
- Validator node: 2,000,000 Theta tokens
- Guardian node: 1,000 Theta tokens
- Validator and guardian nodes earn TFuel(second token in Theta ecosystem) for minning and finalizing blocks.
It is the basic utility token that powers Theta network:
- Validators and guardian nodes earn TFuel for mining and finalizing blocks.
- Viewers pay TFuel to relayers.
- Advertisers pay viewers TFuel for watching ads.
- Viewers can donate TFuel to their favorite content creators.
- Just like Ether is used as gas to run smart contracts on Etherium blockchain. Developers have to burn TFuel to run smart contracts on Theta blockchain.
🤖 How does it work ?
Video delivery network
Theta network does not use blockchain to store videos. It uses blockchain to record transactions and incentivize behavior that makes peer to peer video sharing possible.
The actual video delivery network consists of relayers who store cache of videos and relay it to nearby viewers.
The video delivery network comprises of:
- It records the location of all the relayers in a spatial database as they join and leave the Theta network.
- Viewers query tracker server for the list of relayers who can provide them the video.
- Relayers who provide their spare computer resources and internet bandwidth to relay videos are called Edge nodes.
- Viewers pay TFuel to Edge nodes for utilizing their services.
Elite edge nodes
- Edge nodes stake TFuel to become elite edge nodes.
- Elite edge nodes generate TFuel in addition to the TFuel paid by viewers for using their services.
- Elite edge nodes were introduced in 2021 to onboard more relayers.
Intelligent player client
- Viewers run intelligent player client to stream videos using Theta network.
- Intelligent player client queries tracker server to get list of nearby edge nodes.
- It then performs a speed and availability test to select the best edge nodes.
- It downloads the video from the selected edge node.
Theta network requires a fast and scalable blockchain with very less gas fees so that it can accommodate millions of micro-transactions in real-time.
Theta team built their own blockchain using proof of stake consensus mechanism. The main idea being:
- A small number of validator nodes come to consensus quickly and produce blocks as fast as possible.
- Then thousands of consensus participants called guardian nodes check and finalize blocks at regular checkpoints.
- Have to stake atleast 2 million Theta tokens to become validator node.
- At present there are 13 validator nodes being run by following companies:
- They produce blocks as fast as possible.
- Have to stake 1,000 Theta tokens to become guardian nodes.
- They check and finalize the blocks produced by validator nodes at regular checkpoints.
- In case all validators are malicious – guardians re-elect the validator nodes and reset blockchain to most recent uncompromised block.
🤑 How much money does Theta project have for future development ?
- Theta team raised $20 million by selling 30% of Theta tokens in September 2017.
- The team has kept 37% of Theta tokens aside to fund future development.
- The project does not have any other source of revenue except for the funds held.
- Video streaming platforms are growing:
- TVs are getting bigger.
- Virtual reality is finally here.
- Customers are demanding 4K and 8K video content.
- Theta team built Theta network to solve CDN issues being faced by Theta.tv. Running Theta.tv along with developing Theta network gives them feedback regarding difficulties being faced by video streaming platforms.
- Theta network has partnered with major brands in video entertainment industries.
- Although Theta project’s code is open-source, Theta team has patented the code. This will stop competitors to copy their source code.
- Theta blockchain offers developer tools and compatibility with Etherium. This will allow Etherium developers to seamlessly transition to Theta blockchain without gathering any additional knowledge. Theta blockchain supports popular Etherium tools like
- Ethereum-compatible RPC API suite,
- Smart contract development tools,
- Truffle Suite and Remix integration,
- Metamask integration, and
- Other components like Web3.js, Ether.js
- Theta project has hired some of the most experienced advisors in the media and blockchain space:
- Steve Chen, Co-founder of Youtube
- Justin Kan, Co-founder of Twitch, etc
- Theta network was the first decentralized peer-to-peer video streaming solution. The project does not have any serious competitors till now.
- Economy of scale: Theta network will become even more efficient and fast as more and more edge nodes join the network.
😨 Risks and challenges
- Theta team maintains and upgrades Theta codebase. This exposes the project to the following risks:
- Government crackdown.
- Differences among the team on how to run the project.
- Theta network has to have a minimum number of edge nodes to be a viable solution.
- Malicious actors can use Theta network to distribute abusive content like child porn etc. The team will have to come up with ways to moderate the content without compromising decentralization.
- Theta team holds sizable amount of funds. However, they do not have any profit model that generates revenue. Theta is a long-term project whose growth can be affected by lack of funds.
Theta token has a max supply of 1 billion tokens. These were distributed as follows:
- 30%: Private sale
- 7.49%: Team
- 1.23: Advisors
- 12.5: Partners
- 12.5: Network seeding
- 36.28: Reserves for future development
TFuel has max supply of 5 billion tokens. It also has inflation of 5% per year which is paid to elite edge nodes, validators and guardian nodes.
Theta token does not have any inflation because all of its fixed max supply of 1 billion tokens is already in circulation.
TFuel has annual inflation of around 5%. Sources and sinks of TFuel are as follows:
Token’s price increases due to demand pressure.
Demand pressure on Theta token will come from:
- Validator and guardian nodes: They will acquire the minimum threshold of Theta tokens for staking.
- Speculators: They will buy Theta tokens for price appreciation.
Demand pressure on TFuel token will come from:
- Elite edge nodes: They will acquire TFUel for staking.
- Developers: To pay for executing code and running smart contracts.
- Viewers: Utilizing services of Theta network.
- Speculators: They will buy Theta token for price appreciation.
Supply pressure on a token decreases its price.
There is not much supply pressure on Theta token except for early investors who have made a sizable profit and might sell part of their holdings to realize profit.
Supply pressure on TFuel token will come from the Nodes who will sell part of TFuel rewards to cover their operational costs.
Video streaming is a multitrillion-dollar market growing at an exponential rate.
Buying Theta and TFuel tokens is different than owning a share of video streaming platforms. However, it is certain that the market cap of Theta and TFuel will keep increasing till the time the network keeps growing.
🧐 Indicators to watch out for
- Their YouTube channel is growing:
- Their Twitter account is growing:
Most of the traditional centralized video platforms like Youtube and Twitch will integrate Theta network for streaming videos once they realize:
- Using Theta network is cheaper.
- It provides better streaming experience to viewers.
Theta blockchain is not limited to just streaming videos. Any Etherium app can be migrated to Theta blockchain. Theta has the potential to become a multipurpose blockchain and not just limited to streaming videos.
Theta is a better investment than TFuel because:
- Has fixed max supply
- No inflation
- Generates TFuel when staked
- Demand and supply-side are easier to account for.