Theta Uses Its Native TFUEL Token To Govern And Incentivize Growth

What Is Theta Fuel (TFUEL)?

Theta Fuel (TFUEL) is one of the two native tokens on the Theta blockchain. TFUEL should not be mistaken for  Theta Token (THETA), which is the governance token of the Theta blockchain supported by thousands of community-run Guardian nodes and its Enterprise validators including Google, Binance, Blockchain ventures, Gumi and Samsung.

TFUEL is the second token on the Theta blockchain that serves as the utility token in decentralized video and data delivery, it also acts as a gas token. This means that it is used to power all operations on the Theta blockchain, like payments to relayers for sharing a video stream, for deploying and interacting with smart contracts, and as fees associated with transacting NTFs and DeFi applications.

In addition, it is also used to incentivize users in the ecosystem who share their redundant computing power as Edge Compute nodes as well as bandwidth resources as Edge Caching nodes for video streams and other data.

Theta Token (THETA): The governance token of the Theta protocol. THETA is used to stake as a Validator or Guardian node, contributing to block production and the protocol governance of the Theta Network. By staking and running a node, users will earn a proportional amount of the new TFUEL generated. The supply of THETA is fixed at 1 billion and will never increase.

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Theta Fuel (TFUEL): The operational token of the Theta protocol. TFUEL powers on-chain operations like payments to relayers for sharing a video stream, or for deploying or interacting with smart contracts. Relayers earn TFUEL for every video stream they relay to other users on the network. You can think of Theta Fuel as the “gas” of the protocol. At Mainnet launch on March 15th, TFUEL will be created as a native token on the Theta blockchain.

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Who Are The Founders Of Theta Fuel?

Theta Token Team Members

Theta Fuel, and in extension, the entire Theta Ecosystem, was co-founded by Mitch Liu and Jieyi Long in 2017. Liu has a long history in the gaming, video and virtual reality industries, co-founding video advertising firm Tapjoy, mobile social gaming startup Gameview Studios, and THETA.tv, the live streaming platform whose DApp was the first to be built on the Theta protocol.

Jieyi Long is Theta’s second co-founder and CTO, following similar multi-year experience in design automation, gaming, VR, and large scale distributed systems. He authored multiple peer-reviewed academic papers and holds various patents in video streaming, blockchain and virtual reality.

Theta now has a modest team, and its official website lists strategic corporate investors as Samsung NEXT, Sony Innovation Fund, media investors BDMI Bertelsmann Digital Media Investments, CAA Creative Artists Agency, and traditional Silicon Valley VCs including DCM, Sierra Ventures and the VR Fund.

How Does Theta Work?


Theta is a network powered by three groups of participants:

  • Enterprise Validator Nodes – Companies who stake THETA tokens for the right to process transactions on the network. Current Validator Nodes include Google and Samsung. 
  • Guardian Nodes – Users who perform work to ensure that the transaction blocks proposed by the Enterprise Validator Nodes are accurate. 
  • Edge Node – Users who either share their bandwidth or relay video streams over the Theta network in return for TFUEL. 

The Theta network also allows developers to build decentralized applications on top of its blockchain. Examples include royalty distribution applications and crowdfunding mechanisms. 

Theta network users can download an official Theta Wallet app to hold or stake their THETA and TFUEL tokens. 

Theta also has built a micropayment system for video streaming purposes that allows content viewers and creators to send and receive THETA via the official wallet app.

Modified Byzantine Fault Tolerance (BFT)

Central to Theta is the modified BFT, a proof-of-stake (PoS) governance mechanism that keeps the distributed network of computers running Theta Network in sync.

Theta’s consensus mechanism differs from traditional PoS in that both validator and guardian nodes participate in the consensus mechanism, adding an extra level of security to the protocol. 

These nodes must stake THETA tokens in order to help power the blockchain, produce blocks and vote on changes. Validator nodes are required to stake a minimum of 10,000,000 THETA while Guardian Nodes need to only stake 100,000 THETA.

Of note, voting power is determined by the amount of THETA staked.

THETA & TFUEL: Use Case, Token Economics And Staking

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.

To do this, stakeholders play important roles in the ecosystem and use TFUEL as the main tool for interactions with the protocol. The whole thing then looks like this and is explained below:

THETA And TFUEL: Use Case

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.

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.

What Makes Theta Fuel Unique?

Theta’s main use case is decentralizing video streaming, data delivery and edge computing, making it more efficient, cost-effective and fair for industry participants. The network runs on a native blockchain, with two native tokens, known as Theta (THETA) and Theta Fuel (TFUEL), powering the internal economy.

Theta’s appeal is threefold: viewers get rewarded with better quality streaming service, content creators improve their earnings and middlemen — video platforms — save money on building infrastructure and increase advertising, subscription revenues. Users have an incentive to both watch network content and share network resources, as rewards come in the form of TFUEL tokens.

The platform is open source, and token holders receive governance powers as with many proof-of-stake (PoS)-based blockchain ecosystems. In addition to video, data and computing, Theta caters to developers looking to launch decentralized applications (DApps) such as DeFi and NFTs on its fully featured EVM-compatible smart contract platform.

How Many Theta Fuel (TFUEL) Coins Are There In Circulation?

As earlier mentioned, there are two coins in the Theta ecosystem; THETA and TFUEL. Both coins are used as the main tools for interaction on the Theta blockchain, yet serve different functions.

There are currently 5,232,675,200 TFUEL coins in circulation, which grows each year as new TFUEL is generated for staking rewards. Theta Tokens are fixed and at their max supply, which means there are 1,000,000,000 coins in circulation which will never increase.

Theta runs on the proof-of-stake algorithm, which means staking is possible. Since the amount of THETA in circulation is the max supply there will ever be, TFUEL is the reward for staking on the network. To qualify for staking, you have to stake at least 1,000 THETA to a Guardian Node or run your own Guardian Node.

How Is The Theta Network Secured?

The Theta Blockchain relies on a proof-of-stake consensus algorithm. It, however, adds a multi-level Byzantine Fault Tolerance (BFT) consensus mechanism on its blockchain to achieve better security along with higher transaction throughput.

At the time of Theta Mainnet launch in March 2019, Theta introduced Guardian Nodes. With the Guardian Node, no single entity controls the majority of THETA tokens being staked at any one time. This further helps the network achieve a high transaction throughput of 1000+ TPS.

Theta uses a financial incentive scheme to ensure user participation in governance activities, and hence its network is secured by its own users.

How To Buy Theta Network (THETA)

Theta Network (THETA) is currently available for purchase on the following exchanges.

Uphold – This is one of the top exchanges for United States & UK residents that offers a wide range of cryptocurrencies. Germany & Netherlands are prohibited.

Binance – Best for Australia, Canada, Singapore, UK and most of the world. USA residents are prohibited from buying Theta Network (THETA) .

KuCoin – This exchange currently offers cryptocurrency trading of over 300 other popular tokens.  It is often the first to offer buying opportunities for new tokens.  This exchange currently accepts International & United States residents.

WazirX – This exchange is part of the Binance Group, which ensures a high standard of quality.  It is the best exchange for residents of India.

How To Store Theta

Users get a lot of flexibility in terms of how to store Theta. The coin is an ERC-20 token, so you can choose from a huge variety of ERC-compliant options. One of the most popular wallets used to store Theta is Metamask. Metamask is a cryptocurrency wallet and browser add-on. The wallet is the most popular ERC-20 wallet option due to its interoperability and easy installation and use.

If you seek to make a major investment in Theta or if you are planning on HODLing this crypto for long periods of time, a hardware wallet is the best option. Hardware wallets keep your crypto stored offline in cold storage. This strategy makes it impossible for online threats to access your holdings. The Ledger Nano S or the more advanced Ledger Nano X both support Theta (THETA).

Theta Token Overview

We already know that internet users have a huge appetite for video and video streaming services. That’s been proven by the popularity of YouTube, Twitch, Live.ly and the video streaming additions to Facebook and Twitter, as well as the increasingly popular Tik Tok.

In fact, networking hardware company Cisco estimates that over two-thirds of today’s internet bandwidth is taken up by video streaming. That amount is expected to increase to 82% over the next 18-24 months.

While that’s all well and good, today’s video streaming is not perfect. Many video streams suffer from what is known as “last-mile” delivery problems. The Content Delivery Networks have created an infrastructure where large datacenters provide streaming services for specific geographic areas.

However, streams are only as good as the infrastructure that feeds into the actual users homes, and this can sometimes be slow and cause frequent lag, rebuffering and choppy streams.

Theta Token Team Members
Traditional CDN Network vs. Theta Token “Hybrid” solution. Source: White Paper

Theta Token’s team has come up with a solution to the “last-mile” problem using decentralized blockchain technology. That has led to the world’s very first Decentralized Streaming Network (DSN). Not only that, but in September 2020 Theta Labs received the first ever decentralized streaming patent covering “Methods and Systems for a Decentralized Data Streaming and Delivery Network.”

In this blockchain network users are incentivized to share their unused memory and bandwidth to improve the overall network. This leads to better overall performance for everyone, all across the globe. According to the Theta labs founder, Mitch Liu

At its core, Theta is enabling users to share their idle bandwidth and computing resources to mine Theta tokens and in turn cache and relay video streams to others in the network

Technology Behind Theta Token

The Theta blockchain network is secured by a Proof-of-Stake consensus mechanism, which is far less demanding computationally, and has a higher transaction throughput when compared with Proof-of-Work protocols. By using PoS as the consensus mechanism it’s possible to have many different devices acting as viewers and caching nodes.

You might wonder how Theta Token is handling the issues of scalability in blockchain and video streaming. They have developed a Resource Oriented Micropayment Pool to solve scalability issues. In addition, they are implementing something called Proof-of-Engagement to track the delivery of video segments.

The distribution and collection of rewards on the platform is handled by Smart Streaming Contracts, which are a specific type of smart contracts on the Theta Token blockchain.

Here are more detailed explanations of these new concepts:

Resource-Oriented Micropayment Pool

The Resource Oriented Micropayment Pool was created by Theta Token specifically to create off-chain payment pools that users can for off-chain withdrawals. They have been designed to be resistant to double spending and also offer more flexibility than other off-chain solutions.

Resource Oriented Micropayment Pool
Resource Oriented ​Micropayment Pool ​overview. Source: Whitepaper

If a double spend is attempted it is detected by the validators on the Theta Network. One use case for the Resource Oriented Micropayment Pool is to allow for payments to multiple caching nodes without using on-chain transactions.

The major benefit of using this solution is that it allows for much greater scalability by keeping many micro-transactions off the blockchain.

Proof-of-Engagement

As you might guess from the name, this is a protocol that proves viewers have actually watched a live video. It’s a means of providing transparency for advertisers, as well as being a means for users to earn Theta tokens in return for their engagement.

The Proof-of-Engagement protocol is necessary to create a reliable measure of video stream engagement and a trustworthy way for viewers and advertisers to measure their video stream engagement.

Smart Streaming Contracts

Smart Streaming Contracts are type of smart contract or incentive contract used to help facilitate reward distribution and collection.

Incentive Contracts Theta Network
Examples of Incentive Contracts on Theta Network. Source: Whitepaper

There are a number of use cases for Smart Streaming Contracts, including:

  • Advertisers rewarding streamers and viewers;
  • Viewers gifting rewards to streamers;
  • Gift contracts for multiple streamers;
  • Premium or paid video content;
  • Subscriptions to streamers content or to Decentralized Content Networks;
  • Cachers can share rewards with viewers and content streamers.

The Smart Streaming Contracts were designed to be executed by validators, which means the original person or entity who funds the contract doesn’t need to be involved with distributions or validations.

Currently these Smart Streaming contracts are being tested on the Testnet, but is expected that they will deploy on the mainnet in early 2021 with the release of the THETA mainnet 3.0. Once Smart Streaming Contracts go live on the mainnet Theta will also implement TFUEL staking and burning.

Theta Token Network

The THETA tokens were launched in December of 2017 and were issued as ERC-20 tokens. Once the blockchain launches (est. late 2018) these ERC-20 tokens were exchanged for native tokens at a 1:1 ratio.

These tokens were also an early part of the SLIVER.tv platform and are used to reward viewers, streamers and those who share their resources (memory/bandwidth) with the Theta Network.

In fact the mainnet did not launch until March 12, 2019, which was a few months late, but the launch went well, with no issues. In addition to swapping the ERC-20 THETA tokens, users also received an airdrop of the Theta Fuel (TFUEL) tokens.

Following that intial launch, v 2.0 of the mainnet went live in May 2020. At that time Theta introduced Guardian nodes, a revolutionary, two layer consensus mechanism to complement Enterprise validators run by a premiere set of globalpartners including Google, Samsung, Binance, Blockchain.com, and Gumi.

Theta Token Network Overview
The Theta Network Value Proposition and the TFuel Token Flow

Theta Fuel was created to be similar to the “gas” used in the Ethereum network. With the launch of the mainet the Theta Fuel tokens are being used as the reward token of the Theta network.

One of the most important aspects of the Theta mainnet launch was the introduction of Theta Fuel (TFUEL), the “gas” or payment token of the Theta Network. TFUEL powers on-chain operations like payments to relayers for sharing a video stream, or deploying or interacting with smart contracts.

Relayers earn TFUEL for every video stream they relay to other users on the network. You can think of Theta Fuel as the “gas” of the protocol. In conjunction with THETA, the staking and governance token of the protocol, these two tokens make up the economic system of Theta Network.

Once the network moves to version 3.0 in the spring of 2021 Theta will add a new mechanism for staking and burning TFUEL.

Network Participants

There are numerous stakeholder and nodes that help prop up the Theta Token ecosystem. The network was created with 5 major groups of stakeholders:

  • Streamers/Influencers – These are the content producers of the network who produce live content and videos for later consumption. They are rewarded with Theta tokens for their contributions.
  • Viewers – The users who come to THETA.tv to consume video content. They provide viewer engagement, which is arguably the most important part of the entire video streaming network. Viewers are rewarded for viewing and engaging with videos and can also choose to be rewarded for viewing advertisements.
  • Advertisers – They use the platform to promote services and products to the viewers. They spend Theta tokens to buy advertising time in the network, and to sponsor influencers.
  • Caching Nodes – These are the computers and servers that provide the network with caching services to improve the quality and delivery of the video stream. They are also rewarded with Theta tokens.
  • Ingest Nodes – These are nodes which assist in providing various bitrates, stream resolutions, etc. They provide their services to the caching nodes for live streams and are rewarded for doing so.

THETA Mainnet 3.0

The Spring of 2021 is set for the projected launch of Theta Mainnet 3.0 which will introduce TFUEL staking and burning, among other changes. That’s just two years after Theta initially introduced its peer-to-peer decentralized video delivery infrastructure. One year ago Theta introduced Guardian nodes to that infrastructure, as well as adding Enterprise validator nodes run by premier global partners such as Google, Samsung, Binance, Blockchain.com, and Gumi.

After Mainnet 2.0 was released in May 2020 the EdgeCast technology was introduced, adding significant enhancements to the Theta network and the video streaming capabilities of the decentralized edge network that’s been developed by Theta.

In December 2020 Theta added support for Turing-complete smart contracts, opening up a whole new realm of potential use cases and dApp feature sets. For example, the smart contract support has made it possible for Theta to launch ThetaSwap v1, the very first decentralized exchange (DEX) for the Theta network. Future upgrades could see fully digitized item ownership, innovative payment-consumption models, transparent royalty distributions, trustless crowdfunding mechanisms, and much more.

With these improvements as the foundation, Theta is now working on releasing Theta Mainnet 3.0 with two primary protocol innovations.

The first of these is the addition of Elite Edge Nodes. These are Edge Nodes that have had TFUEL staked to them, making them Elite Edge Nodes. This will enable Uptime Mining and will allow EliteEdge Nodes to earn TFUEL through the staked TFUEL, while also earnings additional TFUEL by providing higher performance for video platforms.

The overarching goal of the Theta crypto economics design is to properly incentivize and reward all Theta ecosystem stakeholders, and thus ensure the security and utility value of the Theta network. This includes a new 2-4% TFUEL inflation mechanism through Uptime Mining.

TFuel Staking

TFUEL staking and burning. Image via Theta blog

Basically Elite Edge Nodes will earn rewards based on the amount of TFUEL staked and the total uptime of the node. Additionally, there will be a lower and an upper limit on the amount of TFuel that can be staked to an Elite node. The lower limit is necessary to prevent sybil attacks, will be explained later. The upper limit is to ensure the most optimal level of decentralization. If users want to stake more TFuel than the upper limit, they can launch multiple edge nodes and split their TFuel across those nodes.

In addition to TFUEL staking, there will also be a TFUEL burning mechanism added as a cost for using the Theta edge network. This burning mechanism is being added as a balancing force against the additional supply that will come from the TFUEL inflation mechanism.

When Theta Mainnet 3.0 is launched there will be a minimum of 25% of each TFUEL payment to the network burned, effectively making it a cost for using the network. The Theta team believes that in the long-run, as Theta’s edge network becomes more widely adopted, this could meaningfully reduce the supply of TFuel.

These changes and more can be studied in greater detail in the Theta Mainnet 3.0 whitepaper.

THETA Coin Price Predictions

Looking to the future, WalletInvestor has a THETA price prediction that predicts it should be largely static, trading at $3.43 in April 2022. 

DigitalCoinPrice is a bit more optimistic, offering a THETA price prediction for 2022 that says saying it should reach $4.48 at some point this year before hitting $5.15 next year and $6.71 in 2025, with the token’s price forecast to be around $17.80 in 2030. 

CryptoGround suggests a value of about $6.51 in one year and $21.05 in five years’ time. 

TradingBeasts says that the THETA price in 2022 should be about $2.95 at the end of the year, before it closes 2023 at around $4.50. A year from then, it should be trading at around $6.13, while at the end of 2025 it should be worth a shade under $7.30.

Any good THETA coin review will tell you that price predictions are often wrong, as they are not representative of all market conditions. Remember that cryptocurrencies can be highly volatile: The value of investments can go down as well as up. and you should never invest more than you can afford to lose. 

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