Value Proposition

Theta wants to build a blockchain platform that will allow for decentralized streaming and video delivery. It is envisioned as a solution to the so-called “last-mile” problem that CDNs (Content Delivery Networks) face. Since the number of point of presences in CDN networks are limited, it is difficult for a CDN to ensure there is a node close enough to every viewer to ensure quick delivery. This leads to choppy streams and rebuffering.

As streams become higher and higher definition, the bandwidth requirements will continue to increase by large orders of magnitude. This will drive the high cost of bandwidths for CDNs even higher.

To solve this problem, the team has proposed a decentralized delivery network, with the Theta token as an incentive mechanism.

As is the case with NKN, the value of the Theta token is highly dependent on the strength of its network. If there aren’t enough viewers contributing bandwidth resources, the network won’t have the video delivery capability to compete with existing distribution companies like Akamai. In addition, streaming presents challenges that differentiate it from other forms of file transfer. One of the unique challenges in dealing with streaming video that other information transfer projects such as Decent do not have to deal with is ensuring that high-priority packets are sent. In file transfer applications, the packets can arrive out of order, but the real-time nature of streaming creates the additional restriction of prioritizing packets to send.

Rollout Strategy

One of the largest challenges facing the Theta network is building the number of streamers on the network pass the critical mass they need to provide value. While the token itself will be used as an incentive for viewers on the network to act as delivery nodes, the team also plans to initially bootstrap the network by utilizing existing CDN networks and solely handling the “last mile” of delivery. By bootstrapping off existing networks, not only will they provide immediate value by handling the last leg of delivery, but also avoid the scaling problem that they would face by trying to build a full-fledged delivery network from the start.

Structure

The Theta network will consist of separate validation nodes and caching nodes so that multiple types of devices — smartphones, for example, can act as caching nodes and viewers. It will use Proof of Stake as its consensus mechanism, because PoS has the advantage of lower computation costs and higher transaction throughput. There is no hashing computation needed for nodes and viewer clients.

In order to handle the high volume of transactions that streaming necessitates, Theta will use novel concept they call a Resource Oriented Micropayment Pool. This scheme allows a user to create a double-spend resistant off-chain micropayment pool that other users can withdraw from using off-chain transactions.

A sequence of transactions from Alice to cachers Bob and Carol using the above structure would go as follows:

1. Micropayment pool creation. Alice publishes an on-chain transaction to create a micropayment pool, with time-lock and a collateral, used to discourage double spending. Alice receives a Merkle proof of the transaction.

2. Handshake between peers. Alice sends the Merkle proof of the received transaction. A recipient peer verifies the Merkle proof to ensure sufficient deposit and collateral.

3. Off-chain payments. Alice signs ServicePayment transactions, and sends them to peers in exchange for parts of the video. The recipient verifies off-chain transactions and signature, then sends Alice the resource.

4. The peer that received ServicePayment transactions can publish signed transactions to blockchain before the timelock expires to withdraw tokens as payment.

Theoretically, micropayments can be made infinitesimally small to discourage malicious content providers from sending fake or phony video data.

Current state

In terms of understanding their problem space and domain expertise, the Theta team has one of the strongest teams I’ve seen in the blockchain space so far. Among the founders of the team we have the following:

Mitch Liu — CEO of sliver.tv and co-founder of Gameview Studios and Tapjoy

Jieyi Long — CTO of sliver.tv and leader of the technical team with a PhD in Computer Engineering.

Ryan Nichols — Head of product for sliver.tv and previously director for Tencent’s WeChat

Rizwan Virk — Advisor to sliver.tv. Current director of Play Labs at MIT.

What might be even more impressive is their list of advisors. Theta token’s advisory team includes:

Justin Kan — Co-founder of Twitch

Steve Chen — Co-founder of Youtube

Rajeev Surati — PhD and video compression expert

Cliff Morgan — CEO of GFUEL energy drink

Sam Wick — Head of Ventures at United Talent Agency

Dennis Fong — CEO, Plays.tv

And on the blockchain side:

Sebastian Serrano — Founder of ripio

Fan Zhang — Sequoia Capital China

Steve Dakh — CTO of SmartWallet and founder member of Ethereum

Ma Haobo — CEO of aelf

Travis Skweres — Founder of CoinMkt

Shoucheng Zhang — Danhua Capital

Not only does the team have a solid blockchain advisory team, but within their problem domain — streaming and video delivery, they have two of the most successful entrepreneurs to have come out of that space. These partnerships have the possibility of aiding in Theta’s adoption and enhancing the network effect that is essentially to the token’s success.

The Sliver.tv team has raised $7.2MM seed in 2016 and $9.8MM Series A financing.

Theta Labs has launched a testnet for its video delivery network.

The team communicates regularly with monthly roundups on their Medium page and has a growing reddit community and twitter.

Outlook

This looks like a very promising token to invest in. There are several other coins in the data delivery space, but not many are focusing on the problem of streaming video, which presents unique challenges not present in other data delivery applications.

The founding team is solid, as is the advisory team. They’ve been able to gather a group of people with expertise in both the technical aspects of their platform, and also advisors such as Justin Kan and Steve Chen that have a deep understanding of problem domain they are working in. There is a testnet that has been rolled out and the team also has in mind a rollout plan to bootstrap the network and handle the critical problem of making sure the platform provides value even in its infancy.

Ultimately, the Theta platform is a project solving a problem in a domain (data transfer) that has seen successful implementation of decentralized solutions, with a strong founding team and advisors covering all areas of expertise needed, and a plan to grow the network from infancy. This is a project that, if executed well, could very easily see massive growth.