Theta Fuel Use Case

The future of online entertainment and social media lies in video. Twitch and TikTok have shown just how large video sharing platforms can grow in popularity.

Theta has created a novel blockchain powered video streaming platform and attracted partners such as Google, Samsung and Sony. Now Theta shows huge promise as a cryptocurrency to watch in 2022. What is the Theta network?

What is Theta?

Theta is a decentralized peer-to-peer video streaming blockchain platform that aims to provide a high-quality video and content delivery network. Theta incentivizes users to supply bandwidth and computational resources to the network by providing token rewards.

Usually, video platforms are run by centralized data centers or networks and this can cause issues with delivering high-quality videos to locations around the globe. Often a video may be high quality at its source but by the time it reaches the viewer it will have degraded to a much lower resolution.

Having a global decentralized sharing network enables a reliable standard of video quality at any location. Theta has also been adopted as a method of live-streaming gaming with micropayment options and high-quality feeds. Video streaming is carried out similar to torrenting where each node hosts a portion of the video and the end-user watches the entire video. 

The Theta blockchain was originally launched as an ERC-20 token on the Ethereum network and had an initial private token sale which raised $20 million. This sale was for 30% of its total supply (1 billion THETA tokens). The Theta mainnet was launched in 2019.

What are THETA and Theta FUEL?

Since then, Theta has had two native tokens, THETA and TFUEL. THETA is used primarily as a staking token. Theta tokens are not mined and are issued from an existing pool. Theta Fuel or TFUEL is a utility token used in a similar fashion as Ethereum’s gas. It is also used for micropayments for content creators and transactions within the Theta network. TFUEL is generated by block production.

Developers and companies pay TFUEL to stream videos on the network and deploy smart contracts. Users (Edge nodes) who share computational resources or spare bandwidth receive TFUEL in return. Edge nodes can then sell their TFUEL tokens to users who wish to stream videos. 

Theta Background

Theta was originally founded by Mitch Liu and Jieyi Long in 2017. The co-founders had backgrounds in video streaming and online gaming. The Theta Labs board includes many notable members including Justin Kan (Twitch co-founder) and Steven Chen (Youtube co-founder).

Theta Labs have partnered with many different organizations including Samsung, World Poker Tour, Google and CONtv Anime. It hosts a range of live streams and videos on its online streaming site, Theta.tv, where users can watch videos without an account or earn tokens with one. 

Theta has announced the launch of a third token, TDROP, in February 2022. This token will be used to provide liquidity in their NFT market and within their new governance and staking mechanism. This is part of their roadmap to further develop their NFT and DeFi services. The Theta team has released a new whitepaper detailing their plans for 2022.

Theta Fuel Use Case: THETA and Staking

The Theta blockchain uses a BFT Proof-of-Stake consensus mechanism to process and validate transactions. Users stake THETA tokens to participate and earn rewards. There are 2 components to the validation process, Enterprise validator nodes and Guardian nodes. 

Enterprise Nodes are companies who stake a large amount of THETA tokens to process and validate transactions and create blocks on the Theta blockchain. There are over 20 Enterprise Validator nodes on the blockchain and this includes companies such as Google, Sony and Samsung. To take part in processing transactions, validator nodes must stake 1 million THETA tokens. In return these nodes receive TFUEL coins as a reward. 

Guardian nodes finalize the blocks that have been created by the Enterprise Validator nodes. THETA holders only have to stake 1,000 THETA coins. These community-run nodes ensure a second layer of security to the consensus mechanism. There can be thousands of Guardian nodes in the Theta ecosystem. These nodes also receive TFUEL as a reward. 

Staking Reward

TFUEL is issued to each node in proportion to the amount of THETA tokens staked. So if there is a total of 50 million tokens staked, a node who stakes 500,000 tokens will receive 1% of the TFUEL issued. 

This means that any THETA holder who stakes coins in the process will receive a reward in the form of TFUEL tokens. The Guardian nodes enable a huge proportion of users to take part in the process rather than just large stake holders.

Theta Fuel Use Case: TFUEL as a Gas Token

The TFUEL token is used as a utility or gas token within the Theta network. This is similar to Ethereum where its sole token, Ether, is used to pay transaction fees. However, with the inherent volatility of the cryptocurrency markets, this means that transaction costs can vary hugely depending on the value of the Ether token.

Transactions on Ethereum can cost up to $70 and the network can be very congested due to lack of resources and issues with scalability. The delay and high cost can be a major issue for many users and make it difficult for businesses to plan.

Theta tackles this problem by having a separate token that is used for network resources that is not tied into the consensus mechanism. The cost of these resources is paid in TFUEL tokens.

At the launch of the TFUEL token, 5 billion TFUEL tokens were issued amongst the users to be redistributed through use and to power the network. While tokens are issued as blocks are generated, TFUEL is also burned as it is used, ensuring a stable supply of TFUEL.

TFUEL and Video Streaming

Streamers and developers who wish to use the platform require bandwidth and computational resources. Anyone who wishes to stream their video content must buy TFUEL from either members of the Theta network or on exchanges to spend on these resources.

Users (Edge nodes) who provide bandwidth and other resources to the network for streaming receive TFUEL in return. They can sell their TFUEL on exchanges to anyone who wishes to use the platform or use it within the Theta ecosystem. This incentivizes the sharing of spare resources and the creation of a large global peer-to-peer video hosting network.

Theta Fuel Use Case: TFUEL and Micropayments

Theta has a built-in system to allow micropayments. This is in the form of TFUEL tokens. Viewers can pay content creators for their videos. Theta enables this by having an off-chain layer for these payments that makes it cost efficient.

Similar to the Lightning Network used by Bitcoin and other blockchains, Theta has a second layer in which these transactions take place. This reduces the computational resources needed. TFUEL holders can pay for access to videos or pay content creators in a subscription model.

So a TFUEL holder may pay tokens to access exclusive video content or pay a creator for their work. This makes the Theta network attractive to content creators as a way to monetize their videos and manage their content.

Theta and Brave

In 2019 Theta announced a partnership with another blockchain, Basic Attention Token (BAT). Basic Attention Token uses  a specialized blockchain powered browser called Brave which rewards users with BAT tokens for their “attention”. Users are paid using micropayments for the amount of time they spend looking at advertisements or content. 

With this new partnership, videos will be published by SLIVER.tv (a company using the Theta platform) on the Brave browser. The Theta users who provide bandwidth will earn TFUEL tokens and there will be Brave ads running with the videos where viewers can earn BAT tokens.

This cross-blockchain partnership is targeted at users who are active within the cryptocurrency landscape and enables both BAT and Theta users to earn tokens.

Theta Going Forward

Theta has seen major partnerships and success since its initial launch. It is a fast growing cryptocurrency and video platform with a strong community. The THETA token is used primarily as a staking token to validate transactions. TFUEL has a range of functions including as a utility token and for micropayments.  The two tokens function to underpin the network and incentivize users to provide resources and participate.

Theta Labs have released their plans for a new token and advancements in 2022 to great online interest. Theta seems to have found a niche in the growing video streaming industry (the industry has been predicted to reach over $70 billion in value in 2021). Both blockchain and live streaming aficionados have invested in this cryptocurrency and see huge potential.

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