Theta Network Analysis – A Decentralized – Video Content Delivery Network

Theta Network - Fundamental Analysis

The last five years have drastically changed the way we used to consume content for entertainment. Personally, it’s been a while since I had last seen a movie in a theatre. Now, I just like Netflix and Chill. Let’s not forget YouTube, Amazon Prime, Lionsgate, and many more. It is super accessible and cheap.

I also don’t know a person who has never used any video streaming service.

Although I don’t think that video streaming services would replace theatres, OTT (over-the-top) platforms have established a new method and stream of business for the entertainment industry.

In 2020, the Video Streaming Industry had been valued at $50.11 Billion and was expected to grow by 21% every year till 2028. (Source – Grand View Research Report)

However, with the growing business and users’ expectations, the industry Is facing several problems, such as:

  • Poor Quality

The load time and video quality are not the same across the globe due to the fragmented infrastructure of the Content Delivery Networks (CDN).

  • Increased Data Needs

The infrastructure of these networks is struggling to meet users’ demand for higher video qualities such as 4k or 8k.

  • Centralized and Inefficient System

As these CDNs are centralized, they can control the content creators and the platforms. Further, there is little or no reward for a viewer.

Problems addressed by Theta Network
Problems addressed by Theta Network

Thus, the main problem narrows down to an inefficient centralized network that could halt the massive potential growth of this industry.

So, what could be the possible solution?

  • What if there was a blockchain-based network that everyone or anyone could control?
  • What if normal users like you and me could contribute our daily unused bandwidth to the system that would resolve the platforms’ data needs?
  • And finally, what if a network rewards its viewers for their contribution to the network?

Theta Network is precisely the kind of network that can resolve all the above issues. Let’s understand what it is.

What is Theta Network?

Theta Network is a video delivery network supported by blockchain technology. It is a bandwidth-sharing protocol where users volunteer to share their spare bandwidth and computing resources with other users. It enables other users to watch a high-quality video without any lag, and the user providing the bandwidth is rewarded by the protocol. Users can contribute to Theta Network with a PC, Mobile Device, or a Smart TV.

Video platforms such as YouTube, Netflix, Lionsgate, etc., can reduce their infrastructure cost for video delivery by integrating with the Theta Network. Further, these platforms will provide a better user experience due to increased bandwidth and computing resources. Thus, Theta Network would allow these platforms to focus more on the business acquisition side.

Solution offered by Theta Network
Solution provided by Theta Network

The network is owned by ThetaLabs.INC, which is based in San Jose, California, USA. The founding team of Theta Network introduced their first project in 2016 called Theta.TV (earlier known as Sliver.TV), where content creators could host their streams to the viewers. Theta.TV seems to be a good streaming platform.

In March 2019, the company launched Theta Network, a Decentralized Video Streaming and Delivery Network. The network has a Proof of Stake consensus mechanism with a TPS (Transactions Per Second) of more than 1,000. The Bitcoin Network has a TPS of 2.77, and the Ethereum Network has a TPS of 13.7.

Now, let us understand the background of the founding team of Theta.

Who are the Founders of Theta Network?

The founding team of Theta Network is as follows:

Theta Network - Mitch Liu
Mitch Liu – CEO – Theta Network

Mitch Liu – Twitter

Co-Founder and CEO

Mitch has a Bachelors degree from MIT (Massachusetts Institute of Technology) and has a business degree from Stanford University.

Before co-founding Theta Labs Inc. in July 2017, Mitch was a co-founder of Tapjoy (a mobile advertising and gaming startup), Gameview Studios (a mobile resource management game), and (an esports video streaming platform)

Theta Network - Jieyi Long
Jieyi Long – CTO – Theta Network

Jieyi Long – Twitter

Co-Founder and CTO

Jieyi has a Bachelors in Microelectronics from Peking University and a Ph. D. in Computer Engineering from Northwestern University.

During his career, Jieyi has developed multiple patented technologies, including VR live streaming and instant replays for video games.

Before Theta Network, he co-founded with Mitch.

In addition to a solid leading management team, the company has an impressive group of Media advisors. The most notable members of this group are Steve Chen, Co-Founder of YouTube, one of the most popular websites on the internet, and Justin Kan, Co-Founder of Twitch.

Theta Network Partnerships

Theta Network already has a very impressive list of partnerships.

Theta Partners
Partners of Theta Network
  • Google Cloud is one of the validators on the network.
  • After MGM, Lionsgate is the latest Hollywood studio to bring its content on Theta Network.
  • Theta Network has joined hands with Chainlink, in order to online video ad fraud.
  • Theta Media Advisory Council is lead by SamsungVR.
  • Theta has a partnership with Korean video platform
  • Katy Perry has launched her NFT on Theta Drop – Theta NFT Marketplace.

In addition to this, Theta has several renowned investors as follows:

Theta Investors
Investors of Theta Network

Now, let us understand the components of the Theta Network.

Components of Theta Network

Theta Network is a Proof of Stake blockchain network that is fast and cheap and feasible for smaller transactions. This can allow real-time reward payments for the content creators.

The network achieves its consensus through a two-layer structure of nodes:

  • Enterprise Validator Node
  • Guardian Node

Enterprise Validator Nodes propose and produce new blocks in the chain, while Guardian Nodes seal blocks and check on malicious or otherwise non-functional Validator Nodes.

1. Enterprise Validator Node

The network has a limited number of validator nodes which collectively form the validator committee. These nodes have powerful computing resources that can process transactions at high speed and at the least possible cost. These nodes are run by big companies who support the project, such as:

Theta Enterprise Validator Nodes
Theta Network – Enterprise Validator Nodes

2. Guardian Node

Guardian Node is the second layer of security on the Theta Network. A Guardian Node downloads and examines the chain of blocks generated by the validator committee and tries to reach a consensus. These nodes are large in number, which helps in the enhancement of transaction and network security.

A transaction is finalized once both set of nodes have approved it.

3. Smart Contracts

Theta Network is fully compatible with smart contracts, allowing developers to build DApps (Decentralized Applications) over the network. This would ensure a rich user experience.

Video platforms would be able to write smart contracts for loyalty programs to engage more users. Further, video platforms would write smart contracts that would enable real-time payment models such as pay-per-use models (a user would not need a monthly or weekly subscription).

4. Off-Chain Micropayment Support

Although the Theta Network has a TPS of more than 1,000 transactions, this is still not sufficient for the potential adoption of the network. To ensure support for small payments, the network needs to be fast and cheap.

For this, Theta has established an off-chain “Resource Oriented Micropayment Pool” specifically built for video streaming. Further, as the mechanism is off-chain, this would significantly increase the scalability of the platform.

4.     Edge Node

Edge Node is a recent addition to the Theta Network. A user like you or me can contribute their excess bandwidth or computing power to the Theta Network and will be rewarded in TFUEL (the native token of Theta Network).

Currently, there is a project called [email protected], which is a distributed computing project. The project is working on identifying COVID-19 drugs, therapies, and their possible side effects.

By onboarding [email protected] on its network, Theta Network has extended towards the field of Edge Computing. To read more about Theta Edge Computing Platform, click here.

Theta Edge Computing Network
Theta Network – Edge Node

I tried setting up an Edge Node; it was pretty simple and straightforward. The network started contributing my system’s computing power to the [email protected] project and started giving me TFUEL rewards.

Any Windows or MacOS based computer system can connect as an Edge Node. Read the instructions to start an Edge Node here.

Currently, the number of nodes of the Theta platform are as follows:

Type of NodeNumber of Nodes
Enterprise Validator Node16
Guardian Node3,633
Edge Node134,438

6. A Dual Currency Mechanism – (THETA & TFUEL)

Theta network uses a unique dual token mechanism where it uses two different tokens for different uses. Theta token is used to stake, secure, and govern the Theta Network.

Theta Fuel (TFUEL) is the operational token of the Theta Network. Nodes and users will be rewarded for various activities such as

  • Relay node for providing a video stream or deploying a smart contract
  • Edge nodes for sharing computing power and bandwidth

The purpose of keeping two different tokens is to keep the utility and purpose of each token separate. Further, the operation token (TFUEL) is required to have more liquidity and supply in the market than the governance token (THETA). Therefore, the maximum supply of TFUEL is five times of THETA.

To have more clarity, let us discuss these tokens one by one.

a.     Theta Token (THETA)

i.       What is the utility of THETA Token?

The use cases of THETA token are as follows:

  • You can stake THETA Token and become a validator or a guardian node
  • Further, this can be used for governance of the network
  • Advertisers on can pay for ads in Theta Tokens
ii.     THETA Token Economy

The economy of the THETA token is as follows:

                                 THETA Tokenomics

Maximum Supply (Source)1 Billion Tokens
Total Supply1 Billion Tokens
Circulating Supply1 Billion Tokens (100% of Total Supply)
Value of Token (in $)$4.74
24 Hour Trading Volume (in $)$306 Million
Market Cap (in $)$4.69 Billion

As you can see above that 100% of the total supply has already been distributed, which means no new THETA token will ever be issued.

iii.    Where can you buy THETA Token?

You can buy Theta Token on the following exchanges:

b.     Theta Fuel Token (TFUEL)

i.       What is the utility of the TFUEL Token?

Theta Fuel acts like fuel for the Theta blockchain. It is the payment token of Theta Network, which is comparable to the gas fee on the Ethereum network.

The use cases of TFUEL are as follows:

  • Payment to relayers for sharing a video stream
  • Creating smart contracts
  • Staking

In addition to this, Mainnet 3.0 launched by Theta Network would burn all the TFUEL fees received by the network. This would further improve the tokenomics of TFUEL.

ii.     TFUEL Token Economy

The economy of the TFUEL token is as follows:

                                 TFUEL Tokenomics

Maximum SupplyNA
Total Supply (Source)5.3 Billion Tokens
Circulating Supply5.3 Billion Tokens (100% of Total Supply)
Value of Token (in $)$0.2818
24 Hour Trading Volume (in $)$56 Million
Market Cap (in $)$1.49 Billion
iii.    Where can you buy TFUEL Token?

You can buy TFUEL Token on the following exchanges:

  • Binance
  • WazirX

Therefore, THETA and TFUEL together make up the whole ecosystem of the Theta Network.

Features of Theta Network

The features of Theta Network are as follows:

1. Theta Wallet

Theta Network has a wallet that is available in the web version as well as the mobile version. The wallet can be used to store your Theta Tokens (TNT20 standard).

The mobile application is available for both Android and iOS devices. The mobile application has a rating of 4.1 on Google Playstore with more than 50 thousand downloads.

Theta Wallet
Theta Wallet

Further, the good part is that the wallet can be connected with the hardware wallets such as Trezor and Ledger.

2. ThetaSwap DEX

ThetaSwap DEX

Theta Network has recently launched Theta Swap, a Decentralized Exchange (DEX) on Theta Network which can be used to swap tokens in a decentralized ecosystem. This is based on the concept of Automated Market Maker pioneered by Uniswap.

The exchange supports TNT20 tokens (standard tokens of Theta Network). You can try Theta Swap from here. The trading fee of the exchange is 0.3% of the transaction value which is rewarded to the liquidity provider of the pool.

To read more about Liquidity Providers, read our Liquidity Pools Guide here.

3. Edge Cast

Theta - Edge Cast
Theta – Edge Cast

Edge Cast is the first decentralized video streaming platform DApp built on Theta blockchain and uses smart contracts. The whole network is built with the help of Edge Nodes, as discussed above.

Edge Cast is a part of the Edge Node application only. A user can either stream his content or watch other streams on the platform.

Edge Cast is a glimpse into the future as to how Video Streaming Ecosystem would look like.

4. Theta Mainnet 3.0

Theta Mainnet 3.0 has recently launched on 30 June 2021, introducing the staking and burning feature for TFUEL.

The significant features of Mainnet 3.0 are as follows:

  • An Edge Node can stake its TFUEL to become an Elite Edge Node eligible for additional rewards on their staked TFUEL.
  • TFUEL burning mechanism would control its supply in the market and thus the inflation on the token value.

To read more about Theta Mainnet 3.0, click here.

Now, as we have understood the components and features of the Theta Network, let us know what Theta team is planning to do in the near future, i.e., its Roadmap.

Roadmap of Theta Network

Theta Network - Roadmap
Theta Network – Roadmap 2021

In January 2021, the Theta team gave a precise and to-the-point roadmap for the year. So far it has already achieved the major work, i.e., Mainnet 3.0, and further plans to develop more use cases for its Edge Computing stream and build more advanced smart contracts.

Competitors of Theta Network

Now, this is the major Hitch in the potential success of Theta Network. The Theta team has all the experience to make this project a success. Further, they have the support of many renowned advisors like Steve Chen and Justin Kan.

However, what cannot be explored is the potential competitive player in the blockchain and traditional industry.

There are few blockchain-based video streaming platforms such as:

Further, there are some traditional video streaming platforms such as:

  • Youtube
  • Twitch
  • LINO

And lastly, we cannot exclude the big giants like Facebook, Google, or Amazon, who can jump into competition anytime they see an opportunity.

Therefore, to maintain its edge in the industry, Theta Network will have to innovate new services and methods to invite more user adoption.

Now, let us understand the pros and cons of Theta Network.

Benefits of Theta NetworkLimitations of Theta Network
  • High-speed blockchain network

  • Renowned Media Advisors

  • The good success ratio of founders in the previous ventures

  • 2-layer security with the help of validator and guardian nodes

  • 2 Token Mechanism – THETA and TFUEL. Thus, keeping the purpose of each token simple and clear
  • No specific strategy to tackle the present or future business competition

  • The initial distribution of Theta Tokens was highly centralized.

  • The THETA token derives the main value of the network, and it is the governing token.

  • Use cases of TFUEL are not enough for its individual adoption.
  • Conclusion – Theta Network Review – 2021

    The Theta Network project solves some real-life problems for us with a decentralized content delivery network. Further, its edge computing network is the next big leap which the team has taken.4

    The founding team seems skillful and experience for the task they are promising to deliver. Further, they have many known associations in terms of investors, partners, validator nodes, and media advisors. Despite the competition that this project could face, Theta has the capability to stay ahead in the race through better innovation.

    However, some issues make me a bit skeptical about the project. The token distribution is not clear, and it is not identifiable from the Theta Explorer as to how many whales currently hold THETA tokens.

    Further, the dual token mechanism of the Theta Network makes the value system of the network a bit confusing. As an investor, it is difficult to analyze whether you should invest in THETA or TFUEL as both have different use cases and supply concentration.

    Due to the above reason, I do not hold any THETA or TFUEL token. I have decided to just “Wait and Watch” the Theta Network and reevaluate the project in few months.

    Please note that I am not a financial advisor, and this is not financial advice. DYOR before investing.

    Let me know other crypto projects that you would like me to evaluate.

    Let me know your feedback in the comments section and share this article with your friends and colleagues. Subscribe to our newsletter for more such articles.


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