What is Theta Network?

What is Theta Network?

Theta is a decentralised, blockchain-based video streaming network in which users share bandwidth and computing resources.

The project seeks to remove barriers between content creators and end users, and to make data delivery, edge computing and streaming more efficient, transparent and open.

Who created Theta Network, and when?

Theta Network was launched in 2018. The project was created by Mitch Liu and Jieyi Long.

Mitch Liu, CEO and founder of Theta Labs, is a specialist in gaming and streaming video. He holds a bachelor’s degree in computer science from the Massachusetts Institute of Technology (MIT) and an MBA from Stanford Graduate School of Business. He holds four patents in streaming video, virtual reality and blockchain technology.

In 2007 Mitch co-founded the video advertising company Tapjoy, and in 2010 the mobile social gaming start-up Gameview Studios and the streaming platform THETA.tv. The platform’s decentralised application was the first product built on the Theta protocol.

Since 2015 Mitch has been developing the technology used in Theta Network.

Jieyi Long, co-founder and CTO of Theta, is a specialist in electronic design automation, gaming, virtual reality and large-scale distributed systems. Long is the author of numerous academic publications and patents in streaming video, blockchain and virtual reality.

Who develops Theta Network?

Development is led by Theta Labs, headed by Mitch Liu. The company operates THETA.tv, a video streaming site that pays users TFUEL tokens for watching videos.

Theta Labs has 25 employees, mostly working out of the San Francisco office. The company has also recently opened an office in Seoul.

Investors include Samsung NEXT, Sony Innovation Fund, media groups Bertelsmann Digital Media Investments and Creative Artists Agency, as well as Silicon Valley venture firms DCM, Sierra Ventures and VR Fund.

How does Theta Network work?

A key component of Theta is a mesh network made up of nodes. By interacting, nodes bind the network into a whole and make it possible to share bandwidth.

The platform aims to compete with standard content-delivery providers. Its developers believe that with a P2P architecture Theta can either boost the performance of existing CDNs or replace them entirely.

Nodes in Theta are operated by users—the owners of various devices and resources for viewing video content. Nodes geographically close to viewers cache and relay video data.

These nodes are rewarded with tokens for sharing bandwidth and attracting new participants to the network. If the model proves successful, the need for costly data centres could diminish.

How can Theta improve the security and quality of streaming video?

Theta seeks to address the security problems that interconnected data-centre systems face because of their architecture. Such infrastructures give attackers a chance to degrade streaming quality globally and even disable parts of data centres. Theta’s network will consist of tens of thousands of nodes, enabling more effective resistance to potential attacks.

The developers plan to pre-empt potential issues by creating server-side and client-side systems that assess the relative proximity of adjacent nodes. Whenever a node joins the network, a server-side tracker will record data about that specific location, including IP address, latitude/longitude and performance metrics.

Instead of connecting distant nodes arbitrarily, the network favours links among nearby nodes.

Beyond reducing dependence on data centres, this design is intended to let Theta compete with existing CDNs through high streaming quality and stable data delivery.

Which user categories participate in Theta?

The Theta Token ecosystem includes the following participants:

• Streamers/influencers — content creators who are rewarded in tokens.

• Viewers — users who consume video content. They earn tokens for watching videos and may also be rewarded for viewing ads.

• Advertisers — use the platform to promote services and products to viewers. They pay for ad time in Theta tokens and also sponsor influencers.

• Caching nodes [Caching Nodes] — computers and servers that provide caching services, improving video quality and delivery speed. These nodes also earn tokens.

• Ingest nodes [Ingest Nodes] — help provide different bitrates, stream resolutions, and so on. They also help caching nodes run live broadcasts and are rewarded for doing so.

How does the Theta blockchain function?

Unlike the content-delivery network, the Theta blockchain underpins the consensus mechanism and the reward-distribution infrastructure.

The blockchain uses a variant of Proof-of-Stake alongside several technological innovations, including a multi-level Byzantine Fault Tolerance (BFT) mechanism, an Aggregated Signature Gossip Scheme and a resource-oriented micropayment pool.

Multi-level BFT

To achieve high throughput, the Theta blockchain is split into two key layers.

• The first layer includes small groups of nodes (no more than 20 validators per node) operating with a modified BFT. Validator nodes consist of powerful computers that process large numbers of transactions quickly. These nodes are mostly controlled by large companies participating in the network—Samsung, Sony and others. This is the first “line of defence” for network security. A validator node operator must hold at least 1 million THETA tokens.

• The second layer consists of large groups of Guardian Nodes. They are run by many community members. Guardians verify and confirm the work of validator nodes. If the latter accept an invalid block, community nodes stop it. A community node operator must hold at least 1,000 THETA tokens.

This division into layers is intended to provide high throughput while preserving the decentralised nature of the content-delivery model.

Aggregated Signature Gossip Scheme

With the Aggregated Signature Gossip Scheme, Theta aims to reduce the complexity of message passing. To avoid losing throughput in “all-to-all” messaging among Guardian nodes, Theta allows nodes to send their signatures only to their nearest “neighbours”. The Gossip protocol enables the group of nodes eligible to relay messages to expand exponentially.

By shrinking message sizes and improving delivery efficiency, Theta pursues two goals: higher transactions per second (TPS) and better scalability as the number of nodes grows.

Resource Oriented Micropayment Pool

The Resource Oriented Micropayment Pool improves the efficiency of managing micropayments. This option lets some users create an off-chain micropayment pool from which other ecosystem participants can withdraw funds.

The Resource Oriented Micropayment Pool provides resilience to a 51% attack, and is more flexible than off-chain payment channels.

What roles do Theta Network’s two tokens play?

Participants in Theta Network are rewarded for relaying video to other users. Payments are made by the video services themselves, not end users. For sharing video content, the site pays in Theta Fuel (TFUEL).

The TFUEL airdrop took place at the launch of the first mainnet (formally at the end of 2018, but it effectively went live on 12 March 2019). Participants transmit only fragments of data for each video, not entire clips. The end user receives many fragments and assembles them into a whole.

Theta Network also uses another asset — THETA. It is a governance token with which the community can determine Theta’s direction. The token is not yet used to its full extent, but the project intends to transfer control to THETA holders in future.

The project issued the THETA token in December 2017. When the blockchain launched, these ERC‑20 tokens were swapped 1:1 for native tokens.

THETA has a fixed total supply of 1 billion tokens; there is no inflation.

TFUEL has a total supply of 5.2 billion. Its inflation rate is fixed at 5% per year.

Users can stake THETA to receive TFUEL.

How is Theta Network evolving?

In May 2020, the second version of Theta’s mainnet was launched.

In November of the same year, the team released the beta of Theta EdgeCast — the first decentralised streaming application built on the native blockchain.

Theta EdgeCast has no central servers or services. More than two thousand Edge Nodes power the application.

On 4 February 2021, the decentralised exchange ThetaSwap DEX went live on the Theta blockchain. It is based on an automated market maker, similar to Uniswap. The first version of ThetaSwap enables trading in TFUEL and TNT20 tokens.

In March 2021, Theta validators announced that they were staking their Theta tokens worth $100 million in a single, jointly controlled node.

At the end of March 2021, Theta Network postponed the launch of mainnet 3.0 to 30 June 2021.

The third version is expected to include two key protocol upgrades.

First, Elite Edge Nodes will be added. Edge Nodes will be able to acquire Elite status by staking TFUEL and will be rewarded for doing so. They will also receive TFUEL for delivering higher performance to video platforms.

Second, the developers will introduce a new TFUEL inflation mechanism. An additional fee will be charged for using the Edge network. The fee will offset the new token supply: at least 25% of each payment will be burned, which over time will reduce the reserve.

In addition, Theta Labs plans to launch an NFT marketplace that will allow THETA.tv content creators to issue their own non-fungible tokens and use them to engage with audiences.