So they do exist, after all: the cryptocurrencies that are experiencing considerable increases in their price within a brief time. Theta Token is the new star and ray of hope in crypto land. But are we witnessing a rising star here or instead of a shooting star that is just plummeting back towards the ground? What is behind Theta and the split into THETA and TFUEL? Which of the coins should you buy and what should you pay attention to?

We will clarify it in this article and show you what is essential with Theta and what you should pay attention to before investing!

What is Theta? — Problem, solution, and technology

What is Theta? — A question that finds many searches on Google, especially in recent days. The reason for this is the current hype around the THETA token and the associated currency TFUEL. But what exactly does the project want to achieve? What problems does Theta solve, and what exactly does this solution look like? Looking at the technology, we want to work out Theta’s USP (Unique Selling Proposition) and understand why the token is so popular. The best way to do that is as simple as possible. Let’s get started!

The problem

Almost all of us use YouTube, Twitch, Netflix, TikTok, Facebook, or other video streaming services. The future of content is on the Internet and streaming it over that network. However, the biggest challenge for providers is to deliver all this content to the customer in the best possible quality. After all, what could be more annoying than a relaxing “Netflix & Chill” evening where the video keeps faltering or is delivered in low quality?

The problem is not always the customer’s Internet connection, but often an overloaded network on the content provider. Especially with premium formats, increased demand quickly leads to problems. In times of the Corona crisis, there was always discussion about this, because according to Cisco, video streaming now accounts for around 2/3 of Internet demand. This figure could even climb to 82% in the next few years. The problem is the large file formats of increasingly better cell phone cameras and productions in 4K or higher.

The solution

The single point of failure where all hinges are the centralized content delivery networks (CDN) through which content goes to end-users (viewers). This is also referred to as the “last mile” and is summarized explicitly in the Theta whitepaper:

According to Theta, the solution to the last mile problem is a hybrid system in which the last mile is a “caching node” that brings content to viewers based on geographic proximity. The world’s first decentralized streaming network (DSN), where viewers become distributors and can even earn a little extra. How will it work?

Users are incentivized to share and share their storage and bandwidth on the network. This leads to a better web for everyone who uses and participates in it. Why should people share their bandwidth? But more on that later in the “Token Economy” section.

This is also where Theta’s motto comes from because the user becomes an active part of the network:

Next generation video delivery powered by you.

The technology — The Theta Blockchain, PoS, and special features

How will Theta solve the scaling problems of a CDN with a blockchain? Blockchains are not precisely known for scaling. Without torturing you too much with technical details, let’s briefly discuss how Theta plans to implement the problem solving described above. Admittedly, what is technically challenging looks very simple and straightforward in terms of implementation for the user.

Key Facts about Theta Blockchain:

  • 12 Validator Nodes, 395 Guardian Nodes, and 1726 Edge Cacher Nodes.
  • On-chain TPS between 500+ TPS and 10,000+ TPS for rewarding
  • bandwidth sharing through off-chain micropayments
  • Low transaction fee under 1 TFUEL per transaction
  • 6 seconds block time
  • Block size of up to 8,192 transactions per block
  • Mainnet Start 2.0 with Guardian Nodes and Smart Contracts

The Investors:

  • Grayscale, one of the largest players in the cryptocurrency space who is know to move markets has recently opened a trust to take institutional investments in THETA coin.
  • WallStreetBets reddit users have been targeting THETA as their next big target to invest in:

THETA & TFUEL: Use Case, Token Economics and Staking

In this section, we turn to the core of the project, the token economy. This is driven and controlled by the tokens THETA and TFUEL. So in this part, you’ll learn what you’re actually investing in when you purchase one of the tokens on a trading exchange. We’ll also look at staking and how you can earn extra money “on the side” with theta, e.g., by watching video content on theta.tv.

Use Case & Token Economy

The Theta Token started as an ERC20 token until the Mainnet launch at the end of March 2019, after which there was a swap to the Mainnet tokens. What makes the Theta Token economy special is that in addition to the Theta Token (THETA), there is another token called Theta Fuel (TFUEL). Both are core to the token economy and take on different roles.

THETA and TFUEL: Use Case Overview

THETA

This is the governance token of the Theta protocol. THETA can be clocked and act as a validator or guardian node. It is used to validate or produce blocks in the PoS algorithm and is involved in the Theta Blockchain’s governance. The maximum number of THETA is limited and has been set at 1,000,000,000 tokens. We’ll get to the breakdown in a moment.

TFUEL

Theta Fuel, as the name suggests, is the fuel of the Theta Blockchain and is thus in part comparable to the “gas” on Ethereum or NEO. TFUEL serves as a means of payment for transactions, such as setting up caching nodes or interacting and creating smart contracts. However, it can also be earned, for example, by staking THETA or by providing caching power to other users or interacting with the Theta.tv platform.

The Stakeholders

There are various players in a token ecosystem. A core component is a theta.tv (formerly Silver.tv) platform, in addition to third-party providers such as Samsung VR. In the case of Theta, the stakeholders can be divided into 7 groups:

  1. Video Platforms: In addition to theta.tv, third-party providers also play an important role in the network. They buy TFUEL and distribute it to viewers.
  2. Streamers are the producers of the content in the network. They receive TFUEL on theta.tv for their work, for example, through donations from viewers.
  3. Viewers: Viewers on the theta.tv platform can also earn TFUEL by consuming video content. This is done through advertising or engagement, or activities with the video content.
  4. Advertisers: advertisers use Theta Tokens to buy advertising space and sponsorships on the theta.tv platform.
  5. Caching Nodes: The so-called “relayers” provide caching to the network, enabling other viewers to have a better content consumption experience. In turn, they are rewarded with TFUEL.
  6. Guardian Nodes: Verify and complete blocks on the network. They receive TFUEL as a reward for staking THETA. More about this in a moment.
  7. Validator Nodes: Stake THETA and receive TFUEL

If you want to earn some TFUEL as a viewer, you can check out theta.tv and test the platform for free. In addition to gaming and crypto content, you can also find VR content and NASA rocket launches.

Token Metrics — The Hard Facts

Now let’s get to the hard facts. For example, we are talking about the distribution of Theta Tokens (THETA). We also ask ourselves how much TFUEL is produced and how many tokens are there?

Token distribution

An important part of a pre-mined token like Theta is to know its distribution. For governance and a potential sale of the tokens, later on, it is important to know who holds how many shares in the ecosystem. This repeatedly leads to problems and, above all, resentment among the “investors” in most ICO projects whose tokens were generated in advance (pre-mined). Many do not understand that the person who controls the supply and can sell at any time also has a significant influence on the token price.

What’s the situation with Theta? Let’s look at the facts:

Private Sale: 30%, at 0.067 USD per token.
Team: 7.49%
Advisors: 1.23%
Partners: 12.5%
Network Seeding: 12.5%
Labs Reserves: 36.28%

It can be seen that the Private Sale got a lot of the cake and that at today’s meager price of 0.067 USD per token. An increase of almost 600%, but we will come back to that in conclusion with the question: “Is it still worth buying Theta?”. But before that, let’s take a look at the availability of the distributed tokens. Who can already sell their coins? What does the supply curve look like?

The graph shows that 100% of the Theta tokens have already been released from the Sale. Nevertheless, only 870,000,000 of 1,000,000,000 THETA are in circulation. This is because some of them are still in the Network Seeding or Labs Reserve.

IMPORTANT: We have deliberately decided not to include the TFUEL fuel here, as it is subject to constant inflation. According to their shares, the annual increase of the TFUEL supply is supposed to be 5% and is then allocated to the Staking nodes. However, the Validator nodes can adjust this inflation, making it less sensitive and difficult to calculate investment. Currently, TFUEL’s total supply is 3,838,301,572 tokens.

So is it worth buying Theta or not?

You can only answer this question yourself. Never rely on a single source for your decision and do your own research! Theta offers quite a bit of fantasy, yet this fantasy does not necessarily have to be reflected in the token price. In this case, it does, until today. The coming days and weeks will show how much is already priced in. However, in the long run, running a Guardian Node may pay off if the founders’ vision actually catches on with the big players.

Here is our technical analysis on Theta. The near-term price target is $30 a coin: