Theta Network: A blockchain-based decentralized video delivery network

Author: Chain Teahouse

1. Project Overview

Theta Network is a decentralized video delivery network based on blockchain technology, aimed at solving some core issues in the current video streaming domain.

Traditional video streaming services face the so-called "last mile" delivery problem associated with the content delivery networks (CDNs) they rely on. Typically, CDNs require the establishment of data centers close to viewers around the world, but due to the limited number of these data centers, they are often not close enough to most viewers. This creates bottlenecks in the streaming pipeline, leading to unstable streams and poor image quality.

In response, Theta Network's solution is to build a peer-to-peer network that incentivizes viewers to share excess computing and spare bandwidth resources. Since the distance between viewers' devices is much closer than to CDN data centers, it resolves the last mile delivery issue.

The network and protocol are open-source, meaning anyone can build on the Theta blockchain. Content providers can develop decentralized applications specifically targeting their audiences. DApps on the network can offer a range of entertainment types, such as movies and TV, music, esports, live streaming, and remote learning. Video platforms already running on Theta Network include Samsung VR, Cinedigm, Shout! Factory, and THETA.tv.

Theta is the core of operations on its blockchain, with two native cryptocurrencies: THETA (used for voting on protocol changes) and TFUEL (used for executing transactions).

2. Core Mechanisms

The core mechanisms of Theta Network focus on its unique decentralized video streaming technology and economic model, which work together to enhance video delivery efficiency and incentivize network participants.

Here is a detailed introduction to its core mechanisms:

Multi-layer BFT Consensus Mechanism

Theta Network employs an improved Byzantine Fault Tolerance (BFT) consensus mechanism, which allows for a certain number of malicious nodes in the network without compromising overall security and consistency. Theta's consensus mechanism enhances efficiency and scalability by introducing two layers—a small set of validator nodes and a larger guardian node population. Validator nodes are responsible for producing blocks and processing transactions, while guardian nodes participate in the final consensus process, increasing the decentralization and security of the network.

Resource Sharing and Incentive Mechanism

Theta Network innovatively applies blockchain technology to video delivery, encouraging users to share their unused bandwidth and computing resources to support video content distribution. Users can earn Theta Fuel (TFUEL) as a reward for sharing resources, which is the operational token of the network used for transaction fees, video streaming services, and other purposes. This mechanism incentivizes more users to participate in the network, enhancing its bandwidth and caching capabilities, thereby improving video delivery quality and reducing costs.

Decentralized Edge Network (CDN)

Traditional content delivery networks (CDNs) rely on distributed server networks to deliver content to end-users to reduce latency. Theta Network has established a decentralized edge network (DEC) that utilizes idle computing resources and bandwidth from users around the globe to cache and transmit video content. This not only reduces the costs associated with relying on traditional CDN services but also improves transmission efficiency and scalability.

Smart Contract Platform

Theta Network integrates a smart contract platform on its blockchain, allowing developers to create decentralized applications (DApps), particularly those requiring video content distribution. Through smart contracts, content creators, advertisers, and other participants can interact directly without intermediaries, enhancing transparency and efficiency.

Dual Token System

Theta Network employs a dual token system, consisting of Theta Token (THETA) and Theta Fuel (TFUEL). THETA is primarily used for governance, allowing holders to participate in network governance decisions, such as upgrades and protocol parameter modifications. TFUEL, on the other hand, is the utility token of the network, used for transaction fees, executing smart contracts, video streaming services, and more.

These mechanisms together form the core of Theta Network, aiming to address the challenges faced by traditional video distribution networks through decentralization, resource sharing, incentivizing participants, and improving video delivery efficiency, thus providing an efficient and economical solution for the future of video streaming.

3. Tokens: THETA and TFUEL

Theta Network utilizes a dual token system, including Theta Token (THETA) and Theta Fuel (TFUEL), which play different but complementary roles in the network.

Theta Token (THETA)

Primary Use: Theta Token (THETA) is primarily used for network governance. Users holding THETA can participate in governance decisions of the Theta network, such as proposing or voting on network upgrades and parameter adjustments. This mechanism encourages token holders to actively engage in the development and maintenance of the network ecosystem.

Total Supply: The total supply of THETA is fixed, capped at 1 billion tokens. A fixed supply helps prevent inflation and ensures the stability of the token's value.

As of now, the price of THETA tokens is $2.54, with a slight decrease of 0.09% in the past 24 hours and an increase of 127.71% over the past year. The market capitalization of THETA is $2,537,939,366, representing the total value of all circulating THETA tokens. The 24-hour trading volume to market cap ratio is approximately 1.57%. Overall, THETA has experienced some volatility over time, with significant peaks and subsequent declines shown on the far right of the chart. The current price appears to have stabilized, but a slight increase in volume combined with a price drop may indicate recent sell-offs or increased trading activity.

Theta Fuel (TFUEL)

Primary Use: Theta Fuel (TFUEL) serves as the "fuel" for the Theta network, used for executing transactions, running smart contracts, incentivizing content sharers, video streaming services, and advertising. TFUEL is crucial for transactions and operations within the network, providing the necessary economic incentives to ensure the healthy operation and development of the network.

Acquisition Method: Users can earn TFUEL by sharing excess bandwidth and computing resources, watching advertisements, participating in content distribution, and more. Additionally, TFUEL can be traded on major cryptocurrency exchanges.

Supply Mechanism: Unlike THETA, the supply of TFUEL is not fixed. New TFUEL can be generated as rewards for network participants (such as content sharers and validator nodes), a process similar to cryptocurrency mining. This supply mechanism for TFUEL is designed to continuously incentivize users to contribute resources and support the network's operation.

Token Complementarity

THETA and TFUEL play complementary roles in the Theta network: THETA focuses primarily on network governance and security, while TFUEL serves as the fuel for daily transactions and operations. This dual token design ensures decentralized governance of the network while meeting the economic needs of network operations. Through this mechanism, Theta Network can encourage user participation and resource contribution while maintaining the health and security of the network.

4. EdgeCloud

EdgeCloud is a decentralized software platform that the Theta team plans to launch in May this year, aimed at providing unlimited GPU processing power for any AI or video tasks at very reasonable prices. This platform combines the best features of cloud computing, powered by the Theta edge network, which consists of nearly 10,000 active edge nodes globally, making it one of the largest distributed GPU computing clusters in the world. The first phase of Theta EdgeCloud is scheduled to launch on May 1, 2024.

Key Points:

Decentralized AI Computing Platform: Theta EdgeCloud will enable developers, researchers, and businesses of all sizes to access GPU processing power at optimal costs. Advanced AI developers will be able to manage the entire AI pipeline development, from prototyping using Jupyter Notebook to training AI models, including hyperparameter tuning, neural architecture search, and model fine-tuning. These models can then be easily deployed and served on the GPU network of EdgeCloud—optimized, instantly accessible, and scalable. These can ultimately run on ray clusters or raw machines for AI experts seeking more control.

Theta Edge Network: Launched in 2021 as Mainnet 3.0, focusing on GPU-intensive video processing, including encoding, transcoding, and distribution.

Processing Power: The high-performance GPU nodes in the global network provide approximately 80 petaflops of processing power, equivalent to about 250 Nvidia A100 capabilities.

Hybrid Cloud Decentralized Architecture: This allows Theta EdgeCloud to easily run large language models and text-to-video AI models such as Stable Diffusion and Llama2.

Software Development: Theta first applied for a patent for its edge computing platform in 2021, which supports smart contract functionality on a blockchain network, facilitating the establishment of next-generation hybrid computing architectures.

Upcoming Features: AI developers will be able to easily select and deploy popular models and build their AI-driven applications on Theta EdgeCloud. An upgrade to the edge node software with Elite + Booster features is planned for spring/summer.

Community Participation and Support: The Theta team encourages everyone to join discussions through channels like Discord and Twitter to collaboratively drive development when the first phase of EdgeCloud launches.

Theta EdgeCloud showcases Theta Network's ambitious expansion into AI and video task processing while demonstrating its strong capabilities in distributed edge computing. As it develops and deploys, we can expect a surge of innovative applications and services.

5. Team

Theta was founded in 2018 by CEO Mitch Liu and CTO Jieyi Long.

Mitch Liu holds a degree in Computer Science and Engineering from MIT and a master's degree from Stanford University's Graduate School of Business. He has also co-founded various other projects, such as the mobile social gaming studio Gameview Studios, the advertising and app monetization platform Tapjoy, and the live streaming dApp THETA.tv.

Long holds a Ph.D. in Computer Engineering from Northwestern University and co-founded THETA.tv with Liu. He has developed several patented technologies, including instant replay for video games and virtual reality live streaming. The Theta leadership team also includes CPO Ryan Nichols, who previously served as the Director of Tencent's WeChat application.

Notably, the project has a range of investors, including Samsung, DHVC, IBC, and Sony Innovation Fund. Additionally, Theta's advisory board includes YouTube co-founder Steve Chen, Twitch co-founder Justin Kana, and executives from Verizon, Rakuten Viki, and CJ Hello.

Theta Network is currently known to have completed one round of funding, which took place on May 3, 2023, through an undisclosed risk financing.

6. User Guide

How to Use Theta Network?

Theta community members can stake THETA to become guardian nodes. They can also host Theta edge nodes by contributing computing resources for video capture, transcoding, caching, and relaying. THETA tokens are used for staking as validators and guardian nodes, as well as participating in protocol governance.

How to Choose a Theta Network Wallet?

• THETA tokens can be stored in the project's own Theta Wallet, which is available for Android, iOS, and Web.
• Hardware wallets or cold wallets, such as Ledger or Trezor, offer the most secure cryptocurrency storage options through offline storage and backup. However, they may require more technical knowledge and are a more expensive option. Therefore, they may be more suitable for experienced users storing large amounts of THETA.
• Software wallets provide another option and are free and easy to use. They can be downloaded as smartphone or desktop applications and can be either custodial or non-custodial. For custodial wallets, the private keys are managed and backed up by the service provider on your behalf. Non-custodial wallets use secure elements on the device to store private keys. While convenient, they are considered less secure than hardware wallets and may be more suitable for smaller amounts of THETA or for more novice users.
• Online wallets or web wallets are also free and easy to use, accessible from multiple devices via web browsers. However, they are considered hot wallets and may not be as secure as hardware or software alternatives. Since you may trust the platform to manage your THETA, you should choose a reputable service with a good track record in security and custody. Thus, they are best suited for holding small amounts of cryptocurrency or for more frequent transactions.

7. Future Outlook Analysis

Theta Network has an ambitious development blueprint for 2024, primarily focusing on the launch of Theta EdgeCloud.

The company's plans for 2024 include the release of the next-generation edge network for Edge Cloud, including cloud-hosted nodes operated by Theta and the Theta Elite + booster module, enhancing the operation of EEN (Elite Edge Nodes); focusing on the development of MetaChain, Edge Cloud, and DePIN (Decentralized Private Network); new adoption metrics and subchain statistics to support new ecosystem projects, subchains, TN20 tokens, and staking; enhancements to Theta Video API capabilities, including self-service NFT DRM support for live and on-demand, as well as advanced metrics dashboards, and more.

Of course, as an innovator in the video streaming and distributed technology space, Theta Network also faces a series of challenges in the future.

Firstly, it is still a relatively new project, and longevity plays a significant role in determining a platform's reliability. Secondly, it has low liquidity. Coupled with its centralized and privatized initial token offering, which reduces transparency, and the high level of video buffering required by Theta.tv, these are all apparent drawbacks of the project.

Moreover, as the number of network users and use cases increases, ensuring the network scales seamlessly to meet growing demands is a challenge, which includes maintaining low latency, high throughput, and optimized network performance. Additionally, while Theta's technological potential is immense, the pace of adoption by users and content creators may impact the network's success. The ease of user experience and the practicality of the network are crucial for attracting non-technical users. Maintaining the stability of the economic model for Theta tokens (THETA and TFUEL), including token supply, demand, and incentives, is vital for ensuring long-term participation from network participants.

Overall, the future of Theta Network depends on various factors, including technological innovation, ecosystem growth, community engagement, changes in the regulatory environment, and competitive market dynamics. Despite facing challenges, Theta Network demonstrates its potential as an industry leader with a clear growth strategy and a strong network of partners, leveraging blockchain technology to solve real-world problems.