• Tiena Sekharan

What is Theta?

Updated: Jun 14, 2021

In the universe of real-world, non-finance blockchain projects, Theta and Filecoin stand tall.

Theta uses blockchain technology to solve the challenges faced in video streaming. It uses the Theta and TFuel tokens to incentivise viewers to provide bandwidth and storage space on their devices for caching and relaying video content.

What challenges being faced in video streaming does Theta address?

Last-mile connectivity - It is more efficient to draw video streams from places geographically close by. This is why Content Delivery Networks (CDNs), the backbone of video delivery infrastructure, set up Point-of-Presence (POP) data centres close to viewers. CDNs are however constrained in how many POPs they can have near viewers, especially in less developed markets. Last-mile connectivity is therefore among the biggest challenges to optimal user experience. This problem can be addressed with P2P streaming.

Foveated Streaming - In the case of Virtual Reality (VR) experiences, the entire video is not streamed at top resolution. The video at peripheral vision is of reduced quality. As the user turns to face a different direction, the video resolution is improved in that direction. This is called foveated streaming. For foveated streaming to work, the round trip between user and server needs to be as short as possible and hence benefits if the server is as close as possible. If the viewer is far from the CDN POP then the user experience is sub-optimal. P2P streaming reduces the distance between user and server.

Popular live streams - Popular events like football and cricket have millions of people streaming at the same time. A large number of concurrent users put pressure on the current streaming infrastructure. This scaling pressure can be alleviated with P2P streaming which actually works best when many users are streaming at the same time. More peer nodes are available which can pull streams from each other.

=> Theta helps deliver high-quality video and solves the challenges mentioned above by incentivising users to share redundant computing and bandwidth resources as caching and relay nodes for video streams. Once a certain minimum network density is reached, the majority of viewers will pull streams from peer caching nodes which will significantly reduce Content Delivery Network (CDN) costs. Since user devices are closer to each other than CDN POPs, the shorter round trip improves stream quality.

Advantages and disadvantage of P2P video streaming


* When a large number of people simultaneously watch a particular piece of content, it stresses a centralized CDN that faces scalability issues. P2P delivery on the other hand actually works better when more people stream at the same time, as it increases peer resources that can pull stream from each other.

* Further, currently we are dependent on a few data centres for content delivery. If any one of them goes down, the quality of streaming deteriorates. In other words, they represent a single point of failure. P2P streaming is more resilient as it distributes caching and relay nodes.


* The reliability of P2P streaming can be questionable since it is difficult to predict when peer nodes will be available and adjust for the difference in upload and download speeds. If say one is streaming from a particular home computer in the neighbourhood and that computer goes offline, then the network must be able to connect to the nearest alternative node in real-time so that the user experience is not compromised. In that CDNs are more dependable.

=> Therefore, the aim is not to make CDNs obsolete but rather to complement them. Theta wants to reduce CDN bandwidth and hence CDN costs without a drop in service quality.

Censorship resistance

In addition to being a solution for choppy streaming, there is a philosophical reason to support Theta - Censorship resistance.

Traditional content platforms exercise control over the content that you and I can access. There are several cases of governments and platforms censoring content by removing posts or people from platforms like Twitter. Theta has no control over what content is broadcast over its network and hence does not arbitrate the same. It could therefore be a tool to enable freedom of expression.

How does Theta enable P2P streaming?

Users contributing computing and bandwidth resources are rewarded with tokens. No video content makes it to the blockchain. The blockchain is used purely for micropayments in Theta and TFuel token to users contributing caching and broadcasting resources.

A typical video segment is only a couple of seconds long. To facilitate payments for every video segment, a platform would need to support hundreds of thousands of Transactions Per Second (TPS). Current public blockchains have a low transaction throughput (7 TPS for Bitcoin, 15 TPS for Ethereum) making them unsuitable for P2P video streaming.

Theta uses 3 main innovations to enable P2P streaming

Multi-Level Byzantine Fault Tolerance (MBFT)

Theta has built a faster blockchain, that relies on a different consensus mechanism, that supports a higher throughput without sacrificing security and decentralisation. This consensus mechanism is MBFT. This works with 2 layers of security.

A small set of nodes (10 to 20) called Validator nodes, produce blocks using a version of Practical Byzantine Fault Tolerance (PBFT). Since only a few nodes are involved, block production is much faster. Currently, there are 14 Enterprize Validator nodes. These include the likes of Google and Samsung.

Next, a larger group consisting of thousands of Guardian nodes finalise the chain generated by the Validators at regular checkpoints blocks. Guardian nodes provide the decentralisation that protects the blockchain from attacks. Currently, the platform has 3,426 Guardian nodes.

Aggregated Signature Gossip Scheme (ASGS)

If each of the thousands of Guardian nodes has to send messages to each of the other thousands of Guardian nodes then that uses up too much broadcasting capacity making the project unscalable. To get around this problem, Theta uses ASGS where each node keeps combining the partially aggregated signatures from all neighbours and gossips out the aggregated signatures. This way the signatures are shared at an exponential rate while minimising communication overhead.

Resource-Oriented Micropayment Pool (ROMP)

In addition, Theta also supports an off-chain payment mechanism that allows users to create an off main chain micropayment pool that other users can withdraw from and is double spent resistant. This is called ROMP and serves the purpose of further improving the scalability of the blockchain. ROMP functions somewhat like the Lightning Network where micro-transactions settle on the Lightning Network instead of burdening the main Bitcoin Blockchain capacity. Double spend is disincentivized by requiring collateral larger than the deposit.


Theta is a 2-token project.

THETA token is used for staking, securing and governing the network. The total supply is 1 billion tokens. Validator and Guardian nodes need to stake THETA tokens to function as nodes. This removes tokens from circulation and reduces supply. Tokens can be used by advertisers to pay viewers as engagement rewards, by users to gift their favourite influencers, or to pay for premium content to content creators.

TFuel token is used for individual operations like payment for video data packets. The total supply is 5 billion tokens. TFuel used to pay for gas fees for smart contracts is burnt. With greater use of smart contracts, TFuel could become a deflationary token.

Project Partners

Theta has some high profile advisors and partners. Steve Chen (Co-Founder of YouTube) and Justin Kan (Co-Founder of Twitch) are advisors. Google, Samsung, Sony, Line and Binance are partners. These collaborators indicate that the traditional content industry is not antagonistic to Theta but instead is keen to integrate with it.

What would make me more bullish on the project?

Answer- Success in attracting more edge nodes

Traditional players like Google are keen to integrate with Theta and utilize the Theta network to distribute their content. The main thing holding them back is that there aren’t sufficient edge nodes right now to stream content reliably. This is because providing computing resources is not particularly profitable as of right now.

The use cases for Theta tokens like advertisers paying viewers for engagement and users using Theta for premium content will take off only when a certain minimum number of edge nodes are live which encourages the big content providers to use Theta.

With Theta 3.0, the project is becoming aggressive in bringing in more edge nodes. The right incentivization will attract an army of edge nodes making the network useful for traditional content providers.

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