It all starts with a problem most of us are indeed familiar with: terrible streaming quality and infinite loading time when trying to watch a video, whether it is content created by our favorite Youtuber or the latest Netflix show. Blockchain has found many applications that can and are indeed currently changing our lives, but who would have thought it could have also been employed to allow us to enjoy a better streaming service? Well, Theta network, a video platform based on blockchain, did!
The problem, according to Theta, lies in the current system of content delivery networks (CDN), which causes poor video quality due to rebuffering and slow loading, especially in some geographical areas which are not as well covered as others are. Moreover, users nowadays require videos to be of a quality ranging from 4k to 8k, and this of course contributes to slowing down the entire delivery network.
Companies and websites providing video streaming content have traditionally kept everything in one centralized system, which could seem convenient at first sight, but becomes extremely inefficient if too many viewers try to access the content at the same time. As a matter of fact, as more pressure is put on the centralized systems, poor streaming quality and slow loading times inevitably follow suit. Streaming providers could therefore opt for implementing a wider number of servers using a content delivery network, dispersing a group of servers in order for viewers not to exercise too much pressure on a single access point; this, however, results in higher costs, leading to an overall unsatisfactory situation for both users and providers.
In the kind of situation outlined above, the only possible process would see video creators supplying their material to streaming platforms working on a centralized system, which would then allow users to enjoy the show. The issue, as described, lies exactly in this intermediation by the existing platforms. At the same time, Theta aims to address an additional second problem created by such intermediates:
centralized systems capture most of the revenues generated by videos, with a consequent lower reward for video creators and for the platforms hosting them.
The innovative solution advanced by Theta to disrupt the current landscape is therefore that of decentralizing the infrastructure through a peer-to-peer network, so to avoid the costs – and the drawbacks – of centralized infrastructures.
The core idea behind Theta is that people have extra bandwidth available on their devices that they don’t use and which can be employed to power higher-quality streaming for others. For this reason, users from all over the world can contribute to making this network function by providing bandwidth and becoming nodes of the network, which are called Edge Nodes. This way, devices are closer to each other than what happens with servers in the centralized CDN system, therefore reducing loading times drastically. Of course, the more users join the Theta network, the more total bandwidth is made available, thus improving the streaming quality of the videos on the network. Moreover, it is interesting to observe that users making their bandwidth available do not actually stream the entire video clips, but only part of them; therefore, the end-users attempting to view the content available on the Theta Network are receiving data from many different users of the network at the same time, and not from exclusively from one node.
In addition to this already notable advantage, video platforms see their costs reduced as they do not need to rely on the centralized infrastructure anymore, which means higher gains both for them and for video content creators. Basically, this represents a win-win situation for all the actors involved in the industry and explains why many players in the video streaming industry do not see Theta as a competitor, but rather as a way to improve the overall system and lower the costs of streaming.
Could this actually be the solution to the previously outlined problems? Well, to quote Steve Chen, CoFounder of YouTube and media advisor for Theta: “Theta’s innovation is set to disrupt today’s online video industry much in the same way that the YouTube platform did to traditional video back in 2005. One of our biggest challenges had been the high costs of delivering video to various parts of the world, and this problem is only getting bigger with HD, 4K, and higher quality video streams”.
Theta Network launched its live testnet in June 2018, registering participation of 300,000 users from 149 different countries, who shared videos on the testnet 3 weeks after. It was developed by Sliver.tv, an online platform leader in the e-sports sector focused on the development of video streaming technologies based on virtual reality, conceived as a way to make the enjoyment of e-sports an increasingly immersive experience. As a matter of fact, the founders of Theta Network are the same as the ones of Sliver.tv: Mitch Liu, CEO and co-founder of Sliver.tv, and Jieyi Long, co-founder of Sliver.tv and CTO of Theta.
Theta is also open-source software: the basic idea behind such a decision is that in this way it increases the possibility for any developer to create new decentralized applications and services on top of the blockchain, such as royalty distribution applications and crowdfunding mechanisms.
Turning now our attention to the reward structure, one peculiar aspect of Theta Network is that it works with a double token system, to remunerate in different ways both the nodes that are streaming data and those contributing to the improvement of the blockchain protocol. Theta in facts boasts two native cryptocurrencies, discussed in detail below: THETA coin, for voting on changes to the protocol, and TFUEL, for executing transactions.
First of all, in exchange for their contribution in providing bandwidth, Edge Nodes earn Theta Fuel tokens (TFUEL), which are awarded only to those sharing videos with others and paid by the streaming platform, not by the end-users, proportionally to the amount of bandwidth delivered. This token currently has a supply of 5.3 billion tokens: after the initial distribution of 5 billion TFUEL, 5 for each of the 1 billion THETA, the supply is increasing with an initial annual target inflation rate of 5%. The new supply will be determined at the protocol level, adjusted in order to provide the appropriate amount needed to meet the demand from the platforms on the Theta Network. On November 30th, 2021, the price associated with this coin closed at $0.305558, having recorded an all-time high on June 19th, 2021, when it traded at $0.5905.
The second token is called THETA and it represents the governance token of the blockchain, since holders of such tokens will be responsible for the future direction of the project. It has a fixed supply that amounts to 1 billion tokens with no inflation. THETA, as of November 30th, 2021, registered a price of $ 6.6225. Its price has seen quite an impressive growth during the last 12 months: on December 7th, 2020, it registered a price of only $0.699802 and has seen a spike since then. In particular, an increase of 180% was registered from $0.867 to $1.92 within two weeks between December 20th, 2020, and January 2nd, 2021, as Theta announced the release of Theta Mainnet 3.0 in spring 2021, which has then been postponed to June 30th and consisted in a protocol upgrade that added the possibility for the network to display live videos and enable live streaming.
Additionally, THETA tokens earned can be used to pay rewards to content creators – as viewers can already do on platforms such as Twitch, where however an important share of the donation is withheld by the platform – and can be used thanks to the Theta blockchain, fast and designed mainly for small payments. In this regard, Theta has built a micropayment system for video streaming purposes that allows content viewers and creators to send and receive THETA via the official wallet app.
Theta’s blockchain works with the Modified Byzantine Fault Tolerance (BFT), a proof-of-stake consensus mechanism, and is articulated into two levels of nodes, which stake THETA tokens to help power the blockchain:
Enterprise validator nodes: they are only a few – currently 14 – which rely on powerful computers run by large companies, such as Google and Binance, that are backing the network. These nodes propose and produce new blocks of the chain and are required to stake a minimum of 10,000,000 THETA tokens.
- Guardian nodes: there are thousands of them, and they allow to earn TFUEL by staking THETA. These nodes only need to stake 100,000 THETA, and they have the fundamental role of checking that there is no malicious validator node, thus increasing the security of the blockchain.
The main question to address at this point is: Does it look like Theta Network is here to stay? As observed above, companies of the likes of Google have decided to show support to Theta’s decentralized video streaming project; moreover, some potential has been recognized by Samsung, which has initiated a partnership with Theta, having decided to include the Theta.tv e-sports streaming network in future Galaxy S20 smartphones. Samsung may also bring other Theta-powered content platforms to its smart television platform. Finally, it is worth noting that companies such as Sony and Creative Artists Agency are also backing Theta, as well as several venture-capital firms.
To conclude, it seems that Theta is addressing and putting forward real solutions to some widespread problems of the video streaming industry. Indeed, its popularity has been growing recently, and we are left with one question: will we all rely on this network one day to enjoy our Saturday night movies?