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Theta: Blockchain-powered video streaming with microeconomy

TL;DR on our full review on Theta Network

Introduction

Using the Ethereum EVM “World Computer” metaphor, the Theta Network can be viewed as the “World Cache” formed by the memory and bandwidth resources contributed by viewers. The project is trying to build a decentralized video streaming platform that aims to revolutionize the way video content is distributed across the Internet by taking advantage of the decentralized nature of blockchain technology. Users of the Theta platform are encouraged to share unused memory and computing power of their computers. In exchange for sharing bandwidth and resources, viewers will earn Theta tokens. The goal is to provide high quality, smooth video streaming while at the same time reduce the cost of delivering video streams.

Key Features of Theta Network

  • Multi-Level BFT: A modified BFT consensus mechanism which allows thousands of nodes to participate in the consensus process, while still supporting very high transaction throughput (1,000+ TPS). The core idea is to have a small set of nodes, which form the validator committee, produce a chain of blocks as fast as possible using a PBFT-like process. Then, the thousands of consensus participants, called guardians, finalize the chain generated by the validator committee at regular checkpoint blocks. The name multi-level BFT consensus mechanism reflects the fact that the validator/guardian division provides multiple levels of security guarantee. The validator committee provides the first level of consensus — with 10 to 20 validators, the committee can come to consensus quickly. The guardian pool forms the second line of defense. With thousands of nodes, it is substantially more difficult for attackers to compromise the integrity of the network, and thus provides a much higher level of security. The team believes this mechanism achieves a good balance among transaction throughput, consistency, and level of decentralization, the three pillars of the so-called “impossible triangle”.
  • Aggregated Signature Gossip Scheme: A basic all-to-all broadcasting of the checkpoint block hash could work between guardian nodes, but it yields quadratic communication overhead, and therefore cannot scale to 1,000+ nodes. Instead, the team proposes an Aggregated Signature Gossip Scheme which significantly reduces messaging complexity. Each guardian node keeps combining the partially aggregated signatures from all its neighbors, and then gossips out the aggregated signature. This way the signature share of each node can reach other nodes at an exponential rate, leveraging the gossip protocol. In addition, the signature aggregation keeps the size of the node-to-node messages small, and thus further reduces the communication overhead.
  • Resource Oriented Micropayment Pool: An off-chain “Resource Oriented Micropayment Pool” that is purpose-built for video streaming. It allows a user to create an off-chain micropayment pool that any other user can withdraw from using off-chain transactions, and is double-spend resistant. It is much more flexible compared to off-chain payment channels.

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Blockchain and Network

For end-users, Theta’s focus is on providing a seamless way to interact with and contribute to the Theta ecosystem. These include products such as the wallet, block explorer, edge cacher nodes, and Guardian nodes.

The official Theta wallet is available on mobile for iOS and Android, and also on web. The Theta wallet is used for community members to participate in the mainnet token swap, and will operate as a secure way for users to hold THETA and TFUEL.

The block explorer has recently undergone an upgrade, and additional features will continually be added in the future.

Recently, an alpha build of the Edge Cacher was developed. The Edge Cacher allows users with adequate technical specs to serve as a dedicated relay node, able to serve orders of magnitude more video data than current relay methods.

Guardian nodes allow users to contribute to consensus of the network by finalizing blocks that Validator nodes have proposed. Prior to the full rollout of the Guardian nodes, users have the opportunity to participate in the Guardian Node Onboarding Program, where users’ equipment are evaluated based on tech specs, node uptime, and other criteria.

Across live testnet channels, including SLIVER.tv, Samsung VR, and MBN, there are in aggregate over 500,000 unique sessions where a user shared video stream / bandwidth with another local user, the Theta Network management team states. Each time a video segment was shared, a microtransaction was recorded on the Theta testnet.

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Competitors

Well-known traditional video streaming services — Twitch, Youtube, Hulu, Netflix, etc. can be considered as Theta’s potential competitors.

Relative to Peer5 and other non-blockchain content delivery network competitors, incentivization makes Theta unique in creating a robust community-driven P2P network.

The project is competing in the peer to peer video service space. Following projects are Theta’s blockchain competitors:

Key Comparables — Peer to Peer Video Service:

Key differentiating factors of THETA when compared to its competitors include:

  • The project is on mainnet stage.
  • SLIVER.tv, with 3MM monthly active users (“MAU”), as the first app built on Theta. More than 500,000 users have shared bandwidth on SLIVER.tv, with corresponding microtransactions taking place on Theta testnet blockchain.
  • Partnerships with live testnet channels with Samsung VR and MBN.

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Token Mechanics

A Dual Currency System

In the interest of securing the network, installing proper governance, and managing the usage of the network, the Theta blockchain uses a dual currency system.

THETA Token Utility:

  • Validator nodes (block production) or Guardian nodes (block finalization) can stake THETA tokens, and can earn TFUEL (the 2nd token in Theta ecosystem) as a reward.
  • THETA is the governance token of the protocol, so it represents voting share on protocol decisions, upgrades, and more.

TFUEL Token Utility:

  • TFUEL is used as the “gas” of the Theta protocol, and is used to pay for transactions and (in the future) smart contract deployment and operations.
  • It is also the currency of microtransactions for users to pay relayers for videos shared with them.

Validator and Guardian Nodes

10–20 Validator nodes make up a smaller committee to produce and validate new blocks to be added to the Theta blockchain. Validator nodes have a minimum stake amount of 10,000,000 THETA (~1 146 570$).

Guardian nodes are a second node type that make up a “second line of defense” of up to 1,000s of community-run nodes that download and examine the Theta blockchain and try to reach consensus on finalized checkpoints. The minimum number of tokens to operate a Guardian node is 100,000 THETA (~11 465$).

Validator and Guardian nodes stake THETA and participate in block production and transaction processing. In return they earn TFUEL, which powers bandwidth/video relaying. Video platforms demand TFUEL and provide it to their users to allow video relaying on their platform. Relayers earn TFUEL as a reward for relaying, and spend it back on the video platform for premium content, subscriptions, etc.

The supply of TFUEL token will grow by a rate per year set at the protocol. The initial target is a 5% annual increase in supply, which can be adjusted by protocol consensus. The new supply from each block will be distributed to each Validator and Guardian node on a stake-weighted basis. For instance, if a node stakes 5MM out of a total 500MM staked THETA, it will earn 1% of the new TFUEL generated each block.

Block rewards for Guardian nodes are distributed every 50 blocks (~5 min) since that is the block finalization interval. There is no difference between the stake-weighted amount of rewards for Validator nodes and Guardian nodes; both earn according to their proportion of stake versus total amount of THETA staked in the protocol. By virtue of the large minimum requirement of tokens, Validator nodes will earn much more in TFUEL rewards in nominal terms. There are no tiers to rewards earnings aside from the aforementioned differences.

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While Guardian Nodes won’t go live until the end of Q3 2019, there is the Pre-Guardian Node (PGN) client, an early precursor. As for the month of June, more than 670 active users are running the PGN client, totaling more than 100M Theta Tokens (10% of total token supply).

A few days ago, Theta partner and investor, Blockchain Venture, has completed deployment of the first enterprise validator node on the Theta Network. By staking 2M of their own Theta Tokens, Blockchain is directly contributing to the Theta blockchain’s network security.

Next week the team will release an update with more details on how guardian nodes will operate and their release as part of a larger Theta Mainnet 2.0 initiative.

Summary

Team: Mainly consists of tech specialists of different level, who used to develop streaming video applications. Most of the team members works for SLIVER.tv.

Idea: Decentralized video streaming and delivery network.

Development stage: Mainnet.

Whitepaper: Well composed, but outdated (token mechanics). Last updated on November 11th, 2018. No information on token allocation.

Roadmap: Theta has been on time for most communicated milestones.

Video traffic will account for 82% of all Internet traffic by 2022. Considering Internet traffic is expected to reach 4.8 zettabyte, that’s just under 4 zettabyte for video alone. However, the current infrastructure doesn’t allow viewers to take full advantage of the latest video technologies. Everything is too centralized, and content creators lose out as a result. Theta provides a decentralized video streaming platform that has the ability to solve these problems for both viewers and content creators.

But does Theta look like a high potential idea to revolutionize the video streaming world and not another “Twitch on the blockchain”?

For now, Theta is more like an additional platform for monetization for content makers from traditional video services and their viewers. It’s main competitor Twitch takes a 50 percent cut from streamers and has 944.5M monthly visits in comparison with 3.71M on SLIVER.tv, as the first app built on Theta. And, it is basically the same audience. From this point of view, the project needs more collaborations with content creators and advertisers to succeed. The excellent partnerships with live testnet channels with SLIVER.tv, Samsung VR and MBN the project has managed to earn in a short period of time already became Theta’s crucial advantages.

More interesting things are being planned after the network is launched, including shared mining rewards to distribute rewards among several users; anti-piracy measures to dis-incentivize piracy; and the inclusion of a general service platform that goes beyond streaming videos, but provides such services as smart streaming contracts, and the Guardian Nodes will go live until the end of Q3 2019. Theta’s incentive mechanism for a decentralized video streaming and delivery network still could be very disruptive.

Check out our full review on Theta to know more about Multi-Level BFT consensus mechanism, theta team and partnerships, investors, token allocation and more!

This is not financial advice.

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