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Theta Network is a decentralized video streaming network, powered by users and an innovative new blockchain. THETA Network is set to revolutionize video streaming by drastically decreasing the costs of streaming platforms, increasing the quality of service and providing users with the possibility to earn an extra buck by relaying video streams to other viewers.
Over the past few years, video streaming has grown exponentially and this trend is poised to continue. New technologies like virtual reality will only be adding to the growing demand. However, content delivery networks (CDNs) like those of YouTube and Twitch are facing a problem: last-mile delivery. Every customer needs a data center nearby from which to receive the actual content. These data centers, also called Point-of-Presence (POP), are costly and impractical: there will always be places without a nearby POP.
Theta Network solved this problem. Their solution is to delegate (a part of) the burden from POPs to peer-to-peer nodes. People who lack bandwidth can ‘borrow’ some from other users who have an abundance (“edge nodes”) by paying a small amount of Theta Fuel. By adopting this network, streaming platforms could offload up to 80% of their CDN costs. They would then pay edge nodes on behalf of the users for whom the nearest POP is insufficient. Users, therefore, would not have to pay for the lacking bandwidth.
Scalability
More than any other cryptocurrency, Theta Network is facing the issue of scaling. Because thousands of microtransactions are made every second, transaction costs must be negligible and transaction processing must happen within seconds. To solve these problems, a unique multi-level Byzantine Fault Tolerance was created. Instead of having equal nodes, Theta network has three types of nodes with different permissions, hence ‘multi-level’: validator nodes, guardian nodes and edge nodes. As mentioned earlier, edge nodes merely relay video streams to other viewers. They have no role in the creation or verification of blocks.
Validator Nodes
Validator nodes are the ones proposing new blocks. These nodes are currently composed of Theta partners like Google, Sony and Samsung. There are only 10-20 validator nodes. The point of this small, limited group is that the committee of validators can reach consensus over new blocks in a matter of seconds.
Guardian Nodes
After blocks are settled, the thousands of guardian nodes finalize the new blocks. This means that they must convince two-thirds of the other guardians that everyone is seeing the same blockchain by agreeing on the hash of so-called checkpoint blocks. Checkpoint blocks are blocks at the height of a multiple of a chosen integer T. For example, if T = 100, every 100th, 200th, … block is considered a checkpoint block. Guardians who agree on the hash of a checkpoint block must necessarily agree on every block before that checkpoint block, considering the hash can only be the same if the entire previous blockchain is the same.
As a consequence of only searching for an agreement on checkpoint blocks, the guardians have more time to reach consensus. After all, it is harder for thousands of guardians to agree on a new block than for 10-20 validators to do the same. Checkpoint blocks prevent the guardians from lagging behind.
This way the network can process over a thousand transactions per second.
Furthermore, micropayments are confirmed within seconds since they do not require finalization by the guardians. Larger transactions on the other hand do take several minutes to be confirmed.
Off-Chain Transactions
The other, simpler way Theta Network increased their scalability is by processing all small transactions off-chain. Like Bitcoin’s Lightning Network, two users can make a deposit and provide collateral to start transacting without transaction fees with one another. Only the creation and closure of such off-chain ledgers will require transaction fees since only these actions are recorded on the blockchain.
Smart Contracts
The Theta LEDGER is fully compatible with the Ethereum Virtual machine. Solidity based smart contracts can be run on Theta to enable, for example, per-use models where users pay for every video they watch instead of paying a monthly or yearly subscription.
Smart contracts also make royalty distributions more transparent and allow content creators to reward loyal fans with NFTs.
Dual Currency System
Theta Network uses two distinct tokens: Theta Network token (THETA) and Theta Fuel (TFUEL). Theta Network token is used for governance, security and staking. The reward for staking Theta is Theta Fuel. The supply of Theta is limited to 1 billion tokens.
Theta Fuel can be compared to Ethereum’s ‘gas’. It is used for utility-based operations like microtransactions. Theta Fuel has an increasing supply with a 5% inflation rate, but fuel used to deploy or interact with smart contracts gets burned to slow down inflation.
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