Theta Network (THETA) Explained: Decentralizing the Video Streaming Industry

With Netflix, Disney+, YouTube, Twitch, and numerous other services, we live in the age of video streaming.

But do you know how much data all these solutions use to deliver media content to hundreds of millions of active users?

According to the Cisco Visual Networking Index report, while IP traffic is expected to grow from 2017’s 122 exabytes (EBs) per month to 396 EBs/month by 2022, internet video will account for 71% of the whole traffic in the next year.

Such an increase means that streaming providers have to spend more on maintaining their own Content Delivery Networks (CDNs) or renting cloud servers via solutions like Amazon AWS.

Either way, the costs can add up quickly for streaming companies that often pay over $10 million annually only on CDN bandwidth.

At the same time, the users of streaming solutions often struggle with the last-mile delivery problem.

While CDNs operate Point-of-Presence (POP) data centers at numerous locations, their numbers are limited, which decreases the efficiency at which streaming services are delivered to the users, especially in remote and less-developed areas.

As a result, streaming users often face issues, such as bad picture quality, frequent rebuffering, and choppy streams.

The last-mile delivery problem becomes an even greater issue with technological advancement as higher resolutions like 4K and 8K require significantly more bandwidth than the 720p or 1080p standards.

Theta Network, a fast-growing cryptocurrency project, seeks to provide a viable solution to all the above issues by leveraging blockchain and a next-generation platform to decentralize video streaming.

What Is the Theta Network?

Powered by blockchain technology, Theta Network is a next-generation video streaming and delivery platform.

Unlike traditional solutions on the market that utilize centralized servers for delivery, Theta provides streaming services via a decentralized network.

In the Theta Network, while watching videos, viewers share their unused computing and bandwidth resources with others to optimize the user experience and the quality of the streams.

In exchange for their support, viewers receive Theta Fuel (TFUEL), one of the two native tokens the platform uses in its ecosystem.

Users who contribute their devices’ bandwidth and computing resources to Theta are called caching nodes.

Together, the nodes form a video delivery mesh network responsible for delivering streams to viewers. Interestingly, while nodes provide services globally, the delivery is optimized for local usage, which means that the network will pick the closest node for stream delivery (e.g., your neighbor’s computer).

Since the devices viewers use to watch the videos – and also to deliver streaming content to others – are geographically closer to each other, it significantly improves the quality of the streams by reducing the round-trip time (the time it takes to send a signal as well as to acknowledge its receipt).

According to the crypto project, if the number of caching nodes is sufficient, video and streaming platforms can use Theta to reduce their bandwidth costs by up to 80%.

Instead of central servers, the platform features peer-to-peer (P2P) connections between viewers and nodes. For that reason, decentralized networks like Theta do not face issues related to a single point of failure that often leads to service outages.

Instead, the more users are present in the network, the more robust it gets, and the better streaming quality will become.

What’s important to note about Theta is that the decentralized streaming solution does not seek to compete or replace the services of traditional providers like YouTube, Netflix, or Twitch.

Instead, the crypto project aims to provide a much cheaper and more effective way for them to operate their services while offering the chance for decentralized streaming platforms to enter the market via Theta’s protocol.

Maybe this is why Theta has managed to secure investment and partnerships with prominent companies like Samsung, Google, Sony, and Gumi Inc.

How Does the Theta Network Work?

To understand how Theta works, let’s take a look at the most important elements of the network.

Multi-BFT Consensus Algorithm

Theta has its own blockchain platform that uses a Delegated Proof-of-Stake-based (DPoS) multi-Byzantine Fault Tolerance (BFT) consensus mechanism.

As its name suggests, a consensus is reached on Theta via two layers. On the first level, a small set (20-30) of enterprise validator nodes produce the chain of blocks as fast as possible.

After that, they communicate with thousands of community-operated guardian nodes who finalize the chain of blocks the validator committee generated at regular checkpoint blocks.

The crypto project refers to this architecture as a system with two lines of defense.

While validators on the first level can achieve consensus rapidly due to the small number of nodes, guardians are responsible for securing the network by having the final say in terms of validating transactions while monitoring enterprise nodes for malicious activity.

Interestingly, while the validator committee is increasingly centralized, guardians on the second level reach consensus on a decentralized basis.

As a result, the network can achieve a good balance among scalability – over 1,000 transactions per second (TPS), according to the project’s team –, decentralization, and security.

Aggregated Signature Gossip Scheme

When finalizing the blocks generated by the validator committee, one way for guardians to communicate is by broadcasting data to all nodes on the second level.

However, while it’s a process that works in practice, it could significantly limit the throughput and scalability of the network.

For that reason, Theta uses a mechanism called Aggregated Signature Gossip Scheme to reduce the complexity of messaging.

As part of the scheme, each guardian in the network combines the partial signatures from their neighbors before communicating the aggregated signature to the rest of the nodes.

As a result, communication between nodes becomes much faster and efficient while making node-to-node messages smaller.

Off-Chain Micropayments Pool

Theta also designed an off-chain micropayments pool that is purpose-built for video streaming transactions.

While it is double-spending resistant, the feature allows users to create an off-chain micropayments pool that others can use to withdraw funds from via off-chain transfers.

This way, users can pay for streaming content pulled from multiple caching nodes without the need to exchange on-chain transactions.

Doing so saves valuable resources for the Theta blockchain and allows the network to achieve better scalability.

Edge Nodes

Theta’s architecture of the validator committee and guardian nodes allow video streaming platforms to work more efficiently yet require the services to use their own servers, CDNs, or decentralized technologies to operate.

However, with the launch of Theta’s mainnet 2.0, the crypto project introduced another set of community-hosted nodes called Edge nodes.

Powering Theta’s Edgecast peer-to-peer streaming dApp, Edge nodes allow users in the network to relay, transcode, and share excess resources with others without the need for centralized servers.

In exchange for solving the tasks of other users, Edge nodes receive TFuel rewards, which are placed in smart contract that functions as a trustless escrow until the submitted solution is verified by other nodes.

With Edge nodes, it’s now possible to create, upload, and view streams without using any central servers or CDNs on Theta.

Theta Virtual Machine and Smart Contracts

Theta has a virtual machine that is compatible with the Ethereum Virtual Machine (EVM), allowing developers to launch their ETH-based solutions on the prior platform with simple modifications.

Besides that, Theta supports smart contracts that crypto projects (among other things) can leverage to create and launch their own TNT-20 tokens on the video streaming blockchain platform.

Furthermore, content creators on Theta can also launch their non-fungible tokens (NFTs) while users can utilize the platform’s smart contract-powered DEX to swap tokens.

What Is the Theta Token (THETA) and How Is it Different From Theta Fuel (TFUEL)?

Theta uses a two-token structure to operate.

The first one is the Theta Token (THETA), which is mainly used for governance and staking.

While holders can use THETA to vote on future changes, updates, and other important matters concerning the video streaming protocol, validators and guardians stake the cryptocurrency to generate new blocks and finalize them in the consensus process.

THETA’s total supply is fixed at 1 billion tokens without any coins being released in the future.

On the other hand, Theta Fuel (TFUEL) plays a similar role in the network as Ethereum’s gas with some additional functionalities.

While TFUEL is utilized for smart contract interactions and paying on-chain transaction fees, it is also distributed as rewards to users staking THETA as well as Edge nodes, viewers (for sharing their resources), and content creators.

With an initial supply of 5 billion coins, TFUEL features an annual (fixed) supply increase of 5%.

In terms of price, both cryptocurrencies have been performing quite well since they were introduced to the market.

After collecting $20 million from contributors in January 2018, THETA’s price remained relatively stable until July 2020.

However, since December 8, 2020, THETA has experienced a nearly 1,500% increase with year-to-date (YTD) gains of 428% as of May 6, 2021.

The scenario was very similar for TFUEL, which has achieved a 1,000% YTD growth in 2021 with an all-time ROI of over 2,350%.

What Solutions Does Theta Offer?

Theta’s ecosystem grows fast, with the most important solutions of the video streaming blockchain platform including:

  • Theta Wallet: Theta has its own cryptocurrency wallet, which you can use to hold, receive, and send THETA, TFUEL, TNT-20, as well as the platform’s NFTs.
  • Formerly known as, is the project’s own decentralized video streaming platform where you can earn TFUEL for contributing your device to improve the stream quality of other users while watching content on the service.
  • Theta Edgecast: Theta Edgecast is the project’s own dApp, offering users the ability to create, upload, and watch streams in an entirely decentralized way. Edgecast achieves that by using thousands of Edge nodes to maintain the dApp.
  • Theta Swap: Theta Swap is the platform’s native decentralized exchange (DEX). Via the platform, users can exchange between THETA, TFUEL, and TNT-20 tokens utilizing smart contracts and without intermediaries.
  • Theta Token Minter: The Theta Token Minter is a solution for developers and crypto projects to create and launch their own TNT-20 tokens on top of the video streaming protocol’s blockchain.

Theta: Leveraging Decentralization to Solve Video Streaming’s Most Burning Issues

While video streaming is getting increasingly popular, traditional providers face multiple issues, such as increasing costs and the last-mile delivery problem.

Theta aims to fix these by leveraging blockchain technology to create a decentralized video streaming protocol.

In addition to featuring better picture quality and cheaper costs, Theta incentivizes users with TFUEL tokens to share their devices’ resources with others while watching content on the platform.

While the project launched three years ago, it has been developing rapidly, with Theta planning to release the third version of its mainnet in the coming weeks (by Spring 2021).

Theta mainnet 3.0 will introduce two major upgrades:

  • Elite Edge nodes, upgraded Edge nodes that can earn additional TFUEL by staking the token and via delivering higher performance on streaming platforms.
  • TFUEL burning mechanism to combat the token’s inflation by introducing a fee for using the Theta Edge network. The project will burn at least 25% of each TFUEL payment to the Edge network on the protocol level to reduce the cryptocurrency’s supply.


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