What is Theta? The Content Distributor Network Explained
Our existing content distribution system is inefficient. Theta solves this with blockchain technology using THETA tokens.
One of the real-world problems that are not so obvious to most people is the fact that our current existing content and data delivery network is not efficient.
Theta Labs, Inc. solves this problem by forming a network of ordinary Internet users. These are made up of people who can relay data streams along the network, using their excess bandwidth, to those in remote places where the mainstream delivery networks cannot reach.
This network is called the Theta Edge Network, and what powers the economy of this network is the cryptocurrency called TFUEL.
In a previous article, I have discussed how this network works and the benefits that come with it. If you would like to read more about TFUEL and the Theta Edge Network, follow the link below.
In this article, you will learn about another token in the same ecosystem, one that plays an equally important role — the THETA token.
What is the Theta token (THETA)?
THETA is a native token of the Theta Blockchain, and one of its roles is a governance token. Since blockchains are decentralised in nature, no single party is able to make changes without forming a consensus with the other parties in the network.
As in any democratic system, THETA holds voting power to approve or disapprove an Improvement Proposal, such as the infrastructure of the network, the limit on the number of tokens, and what the tokens can do in the network.
As a governance token, THETA is capped at a maximum of 1 billion tokens. The token is akin to a share of a company, except that THETA may represent a share of the entire blockchain network.
The THETA token is designed to be deflationary because of its voting power. It holds the future of the network, and holders of THETA are quite literally the stakeholders of the project, making them accountable for the future directions of the project.
Check the latest rates: Check out today’s rates for your favorite cryptocurrencies.
What is the difference between THETA and TFUEL?
If you are still confused about the difference between THETA and TFUEL, don’t worry. In this section, we will take a bird’s eye view of the entire ecosystem.
So, here we go.
Theta Labs, Inc. has created their own efficient, decentralised Content Delivery Network (CDN), called the Theta Edge Network, to reduce the costs of data streaming. This network, not the blockchain, is made up of computer nodes called the Edge Nodes.
The Edge Nodes interact with decentralised applications (e.g. streaming services like Theta.tv), content creators, and viewers through a digital currency token called Theta Fuel (TFUEL), which acts as a medium of exchange.
For example, Edge Nodes are rewarded with TFUEL for relaying data between streaming services and viewers. Viewers earn TFUEL by watching and participating in online events. Content creators earn TFUEL through donations.
The economy of TFUEL perpetuates by itself, and Edge Nodes do not need to hold THETA tokens in order for the Theta Edge Network to work as intended. However, this network cannot exist alone and requires another network to settle transactions and secure transaction data in a distributed way.
The Theta Blockchain is what is responsible for validating transactions of TFUEL. The Theta Blockchain uses a Proof of Stake consensus mechanism to secure the TFUEL transaction ledger.
Apart from being a governance token, THETA is staked (or deposited) to the network’s treasury system whenever an individual or group wants to take the role of a validator.
Staking incentivises validators to do their work properly. Failing to fulfill the responsibility of a validator, or even harming the network will result in slashing, or removal of some or all the staked THETA tokens.
Learn more: What is the Proof of Stake consensus mechanism?
How do validators earn from staking THETA?
Validators are rewarded with TFUEL, the cryptocurrency for the entire Theta ecosystem. In contrast, other blockchains like Cardano and Polkadot will reward validators with the network’s single cryptocurrency. Why is Theta different in this regard?
The maximum amount of THETA has already been issued, even though the amount in circulation is less than 1 billion THETA (a portion of the stock is staked in the network’s treasury system).
THETA is not meant to be a medium of exchange, but rather as some kind of proof that a network participant is wealthy enough to take on the responsibilities and risks of being a validator.
There are actually two kinds of validators: Enterprise Validator Nodes and Guardian Nodes.
Enterprise Validators Nodes (EVN) are selected partners of Theta Labs, such as Google, Sony, Samsung and Gumi, Inc. These validators had to stake 10 million THETA to have the right to operate as a Validator. Indirectly, the company image is also at stake, which gives additional assurance that the network will work.
The role of Guardian Nodes, on the other hand, are reserved for any person or group who has 100,000 THETA to stake. The role of Guardian Nodes is to police and double-check that the validation process worked by the EVN has been done correctly.
The interaction between the Guardian Nodes and the EVNs allows fast transaction speeds, ensuring a smooth operation for worldwide adoption.
How to store Theta tokens
THETA is an ERC-20 token, which means it is compliant with the standards set by the Ethereum network, the second-most popular blockchain by network users. This means that you can store THETA on any wallet that supports Ethereum (ETH), such as MetaMask or My Ether Wallet.
Theta Labs, Inc. had also recommended their own exclusive Theta wallet. This works on your desktop and can store your earned TFUEL when watching a video stream from any of their supported apps (such as Theta.tv). If you are interested in downloading their wallet, check out this guide right here.
Finally, for the long-term holders of THETA who seek the highest level of security, I recommend offline, “cold storage” using hardware wallets such as Ledger or Trezor.
Looking for a crypto wallet? Here is a brief overview of your wallet options.
What’s the best way to buy Theta tokens?
There are many different ways to buy Theta tokens. What we highly recommend, however, is to buy through a crypto exchange.
Important to note — don’t just choose any random crypto exchange. Make sure that the exchange is regulated and has a good customer support team to back you up if you need help with anything.
With Easy Crypto, not only will you be able to buy and sell cryptocurrencies safely and securely. You can also get a pretty good deal as we offer cryptocurrencies in your local currency.
No more expensive international currency conversion or using an international credit card. We accept regular bank transfers just as well.
Get started: Buy Theta tokens and watch your portfolio grow!
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated August 29, 2022