Theta's market value has entered the top 30, why is the decentralized streaming platform favored?

This article was first published on November 13, 2020, on ChainDD, by Han Ling.

According to the ranking data from the cryptocurrency market website CoinMarketCap, on November 10, the market capitalization of Theta tokens surged into the top 30, surpassing DeFi projects like Uniswap and YFI, with an increase of over 12% in the past week. The decentralized streaming video platform Theta Network has once again returned to the public's attention.

Theta is the Ethereum token of the Theta Network project, which is currently listed on more than 15 exchanges, including major exchanges like Huobi and Binance. In the last 24 hours, Theta trading pairs have mainly concentrated on BTC and USDT, accounting for over 60% of the total trading volume, with exchanges primarily focused on Binance, Huobi, and OKEx, where their total Theta trading volume reached 70%.

Theta began trading on the secondary market on January 17, 2018, with an initial price of approximately $0.154, reaching a peak price of $0.291 on January 26 of the same year. In July 2019, it briefly fell below $0.1, but then steadily rose to around $0.3. A year later, Theta saw significant positive news, rising to $0.6, a tenfold increase. As of the time of writing, Theta is priced at $0.63, with a market capitalization of approximately $600 million.

The Theta Network project is under Theta Labs and is a next-generation decentralized video streaming platform based on native blockchain technology. The initial goal of Theta Network is to leverage blockchain technology to allow users on the platform to share redundant memory and bandwidth resources, addressing a series of issues such as low video quality and high bandwidth costs of traditional content delivery networks.

1. Dual Token System + NFT, Diverse Playable Options of Theta

Traditional centralized content delivery networks (CDN) require the construction of large-scale base stations, which not only require huge capital investment but also do not guarantee network transmission efficiency and quality. Decentralized CDNs are generally considered to be a more realistic and easier-to-implement demand in the application of blockchain technology.

On the Theta network platform, users need to contribute their idle bandwidth, allowing their devices to become cache nodes in the network. Users watching videos can obtain video content from the nearest cache node instead of fetching it from the CDN server base station. Theta is somewhat similar to traditional P2P file systems, where video streamers publish their video streams to ingest nodes. The ingest nodes are responsible for transcoding the video streams into different bitrates and resolutions. Subsequently, cache nodes fetch the video streams and deliver them to end viewers. Users can use video caching software to turn their computers into cache nodes.

The core roles of the Theta project are divided into advertisers, validators, viewers, content creators, and video websites.

Advertisers: Place ads on Theta, supporting content creators, streaming websites, and user communities.

Viewers: Will earn Theta tokens as rewards from advertisers and can gift the Theta they earn to their favorite authors and influencers.

Cache Nodes: Users' idle devices act as cache nodes, earning Theta for caching and forwarding video streams to other viewers.

Ingest Nodes: Influencers publish their video streams to ingest nodes, which are responsible for transcoding the video streams into different bitrates and resolutions.

Validators: Dedicated nodes that verify transactions and assemble new blocks.

Content Creators: Can directly receive Theta as tips from viewers.

Currently, the project has issued 1 billion Theta tokens on Ethereum, with 40% allocated for public sale, 30% owned by Theta Labs for future research, marketing, and community development; 20% for market development for initial partners and end users; and 10% reserved for advisors, partners, and employee incentives.

Theta adopts a PoS consensus mechanism and separates validators from cache nodes. Micro-payment records use a Proof of Engagement (POE) consensus, which allocates the amount of Theta viewers can earn based on the verifiable delivery engagement of video streams. On July 1, 2018, Theta Network announced that the platform employs a dual-token system, with Theta as the equity token for network rights accumulation, security, and governance; and Gamma as the operational token for smart contract deployment and bandwidth sharing rewards. In the white paper, Theta plans to use sharding technology to improve transaction throughput, allowing independent transactions to operate in parallel.

Additionally, with the mainnet providing EVM-compatible smart contracts, users can explore new options on Theta using common DeFi tools, such as lending, stablecoins, and AMM DEX (automated market maker decentralized exchanges). With these tools, users can create smart contracts on the Theta network, leveraging decentralized funds to generate greater returns. Meanwhile, content creators and viewers will be able to issue NFTs related to streaming content based on Ethereum smart contracts, such as emojis, concert tickets, music festival passes, and virtual tickets for sports events.

Currently, with the upgrade to Ethereum 2.0, the implementation of sharding technology will effectively address the scalability issues of the Ethereum network, which will directly help Theta improve network quality and transaction throughput. The recent boom in DeFi and NFTs, along with the upgrade to Ethereum 2.0, has largely driven the significant increase in Theta's price and market capitalization.

Google Becomes Its External Validator Node, Entering the Japanese Market

In May of this year, Google announced that it would become an external validator node for Theta, helping the video transmission network serve users through Google Cloud. Before Google, companies like Binance, Blockchain Ventures, and Gumi Cryptos had already become external corporate validators of the Theta blockchain, participating in proposing and validating new blocks. Theta's ultimate goal is to have 31 external corporate validator nodes. Theta Labs has staked 5 million THETA tokens for Google on its network (as of the time of writing, each token is valued at $0.61, worth over $3.1 million).

After the launch of Mainnet 2.0, there will be hundreds of guardian nodes (which can be deployed by the public) acting as another consensus layer, responsible for determining blocks and verifying malicious validator nodes. With Google's assistance, the number of guardian nodes on the Theta network may increase to thousands or even tens of thousands. Theta also plans to further collaborate with Google on artificial intelligence, machine learning, and big data initiatives. Additionally, YouTube, a subsidiary of Google, is also a major collaboration target for Theta.

In June, Theta announced a strategic partnership with Gumi Cryptos to enter Japan's $3 billion content market. Theta revealed that they intend to whitelist their Theta and TFUEL tokens with the Financial Services Agency (FSA).

In Japan, only whitelisted tokens approved by the FSA can be traded on cryptocurrency exchanges. Currently, there are only 26 tokens on the whitelist in Japan. Theta stated that they "hope to integrate with Japanese streaming platforms to allow Japanese users to earn TFUEL token rewards by watching and sharing their favorite video content."

According to BigDate data, the scale of online video in China is expected to reach 294 billion yuan in 2020, providing Theta with significant application space. However, for the streaming video industry, there are many platforms in the market, and competition among centralized leading video platforms is fierce. Although the blockchain network services that Theta relies on have already captured a certain market share, this is merely the tip of the iceberg for the billion-dollar centralized streaming video business.

References:

1. 【Rating】THETA: The "World Cache" Empowered by Users

2. Bringing DeFi Benefits to Emerging Content Creators on the Theta Blockchain