Theta is a work-in-progress blockchain designed for peer-to-peer video streaming. It aims to be a decentralized video Content Distribution Network (CDN) by allowing anyone with spare bandwidth to become video distribution nodes. These nodes are compensated through proof of work mining on Theta’s blockchain. In order to fairly compensate nodes, Theta introduces a novel concept called Reputation Dependent Mining that increases block rewards based on how many clients a node is serving.
In an ideal world, the Theta blockchain will have a robust internal economy where streamers upload video to Ingest Nodes that transcode video. Video distribution nodes relay the video to viewers and are compensated by the number of viewers the node serves. Advertisers can advertise on Theta by paying streamers Theta tokens and viewers can donate to streamers using Theta tokens.
Theta is a relatively new project. The team raised $16 million and launched Theta in Q2 2017. In Q3 2017, Theta completed an incredibly successful pre-sale of Theta tokens to strategic investors. A public ICO was scheduled for January 2018 but was cancelled from legal concerns. Theta was listed on cryptocurrency exchanges starting January 17th.
The team will start development of the Theta blockchain in Q1 2018 and plans to launch the blockchain in Q4.
"Theta’s innovation is set to disrupt today’s online video industry much in the same way that the YouTube platform did to traditional video back in 2005. One of our biggest challenges had been the high costs of delivering video to various parts of the world, and this problem is only getting bigger with HD, 4K and higher quality video streams,” said Steve Chen, Co-Founder of YouTube. I’m excited to be part of the next evolution of the streaming space, helping Theta create a decentralized peer-to-peer network that can offer improved video delivery at lower costs. The live streaming market is growing at a breakneck pace, seriously. 81% of internet and mobile audiences watched more live video in 2016 than in 2015. Live video is outpacing all other video content formats in terms of ad revenue and is seeing a 113% increase in annual ad growth. Live streaming is huge in China and growing at the same pace it is in the West. The Chinese live streaming market alone is valued at more than $3 billion." - Steve Chen, Co-founder of Youtube
Live streaming platforms rely on Content Distribution Networks (CDNs) to distribute video to viewers. Streamers upload video to ingest nodes, ingest nodes transcode the video to different qualities, the video is passed on to the CDN, and viewers connect to the CDN to download video.
CDNs are very expensive to run. Because video is bandwidth intensive, companies need to make sure CDN edge nodes are as close to their users as possible to maximize quality of service. As such, edge nodes need to be numerous and geographically distributed and it is costly setting up and maintaining these nodes in so many jurisdictions. Bandwidth costs for CDNs are also enormous. Every video stream passing through a CDN is duplicated for every cluster of edge nodes. Publishers like Twitch and YouTube absorb the costs of operating a CDN which reduces the revenue shared with content creators on their platforms.
Theta aims to solve this problem by building a blockchain that supports a peer-to-peer network (think BitTorrent) that acts as a decentralized CDN for live streaming. Users contribute their unused bandwidth to distribute video and are compensated automatically and transparently by the Theta blockchain. Theoretically, geographical distribution, server costs, and bandwidth costs come for free in an economically incentivized peer-to-peer CDN. This will be how Theta plans to one-up centralized CDNs and attract companies to migrate over.
Of course, this relies on the viability of both Theta’s economic model and technology. That is a big if.
Team, investors, and advisors
Theta has a strong team.
Mitch Liu, the CEO, has a BS in Computer Science and Engineering from MIT and an MBA from the Stanford Graduate School of Business. He co-founded Tapjoy which today is a 100+ employee company.
Jieyi Long, the CTO, has a BS in Microelectronics from Peking University, one of China’s top universities. He has a PhD in Computer Engineering from Northwestern University.
Ryan Nichols, the Head of Product and Platform at SLIVER.tv, was once the director at Tencent for Wechat. Riz Virk, the Head of Corp Development, was the director at MIT’s Play Labs. He has a BS in Computer Science & Engineering from MIT and a Masters in management from Stanford Graduate School of Business.
Advisors of Theta/SLIVER.tv include:
- Steve Chen, Co-founder of YouTube
- Shoucheng Zhang, Founder Danhua Capital
- Justin Kan, Co-founder of Twitch
- Fan Zhang, Founding member, Sequoia Capital China
- Dennis Fong, Founder Plays.tv
- Clifford Morgan, CEO of G FUEL
Investors of Theta/SLIVER.tv include:
- Lead investor in the token presale is DHVC (Danhua Capital). DHVC was founded by Prof. Shoucheng Zhang, a tenured professor in the * Department of Physics at Stanford
- Sony Innovation Fund
- SamsungNEXT ventures
- Sierra Ventures
- DCM ventures
- and many more…
SLIVER.tv is a company and a live streaming platform run by Theta’s team. In fact, Theta is a subsidiary of SLIVER.tv. The SLIVER.tv website allows users to watch esports events in 360° video. When there are no ongoing events, users can watch streams and bet on in-game events using currency passively earned from simply being in the audience. Winners of bets get tickets to enter a raffle for in-game items that can be sold on the Steam marketplace, sometimes for hundreds of dollars. A raffle is held for every game of PUBG or CSGO a streamer is currently playing. SLIVER.tv has more than 1 million Monthly Active Users (MAU).
Theta’s team plans to use SLIVER.tv to bootstrap the adoption of Theta’s blockchain. SLIVER.tv has the potential to introduce millions of users to the network early on.
How does Theta work?
User-operated nodes on Theta, called “caching nodes”, act as both miners and relayers of video. The more reliable its service and the more viewers the node serves, the greater the rewards from mining a block. To implement this, Theta’s team has come up with two novel concepts they call Reputation Dependent Mining and Proof of Engagement.
Reputation Dependent Mining uses Proof of Engagement to calculate a miner’s “reputation”. Reputation is essentially the number of viewers that a miner serves and it determines the amount of reward given to a miner from mining a block. The more viewers a miner serves, the higher its reputation.
A miner increases his/her reputation by having his/her downstream viewers periodically compute “service certificates” to send back to the miner. A service certificate is a simple Proof of Work puzzle that helps a miner attest to other Theta nodes that the miner is serving a viewer. If a viewer decides to stop computing service certificates for a miner, the miner can stop sending video to the viewer. Without offering anything in return, the miner will have a tough time convincing anyone to compute service certificates for it. If it spends its own resources to compute service certificates, it is not only expensive, but the miner will also have less computing resources to mine blocks.
- If mining rewards are not enough to cover the costs of operating a miner, then there will be very few miners. This will result in a CDN with a very poor quality of service.
- Will viewers want to watch Theta streams if it means they need to compute service certificates?
- How will advertisers work with the system? Will they be willing to buy and pay with Theta tokens or will they prefer to pay in fiat? Will streamers be willing to accept Theta tokens or will they prefer to get paid in fiat?
- Will service certificates be enough to guarantee service quality? Service certificates are binary (i.e. either a viewer computes one or not). What if there’s gray area video quality issues like buffering and dropped frames? Should the viewer stop computing service certificates for unpleasant intermittent interruptions and risk losing service from the miner altogether?
Theta is an innovative idea. Centralized CDNs are very expensive to operate and the ability to mobilize spare bandwidth and CPU resources from any internet user worldwide has the potential to create a decentralized CDN that is cheap to use. The project has a strong team and an impressive list of investors and advisors.
However, there are also several concerns with the project that cannot be ignored. These include whether mining rewards are enough to cover the costs of operating a miner, whether viewers are willing to compute service certificates in order to watch streams, and whether the CDN’s quality of service will be sufficient for its viewers.