I love writing about the projects that inspire me. It helps me to learn and educate others at the same time. I always look forward to breaking down the complicated pieces of the puzzle into a simpler, more understandable form. Theta is one such project which has highly impressed me and as such, I can't help but write about it. If you wondering why Theta, I would request you to go through my previous article, and besides, it also serves as an appropriate time with the launch of Mainnet 3.0 scheduled for 30 June 2021.
With the goal of enhancing the overall experience and upgrading the entire ecosystem, Theta is at the cusp of launching its Mainnet 3.0. Although the launch has been pushed from April 21 to June 30, excitement around the project is on the rise and I am here to tell you why!
But before we discuss that, It might be prudent to carry forward from where we left last and understand how Theta Network is powered.
Theta blockchain Network is built on multi-level BFT consensus mechanism. It allows for participation of hundreds of thousands of nodes in the consensus process and achieve high transaction speed. (BFT consensus will be the subject of another article)
The core idea of maintaining high transaction speed is through smallest set of nodes, which form the Validator committee. These produce the chain of blocks at high speed while retaining a high degree of difficulty to prevent any activity that would compromise the blockchain integrity. The chain generated by Validators is finalised by consensus participants called guardians.
Enterprise Validator Nodes- These include companies who stake THETA for the right to process transactions on the network. Their main function is block production. Names include CAA, Theta Labs, Binance, Samsung and Google.
Guardian Nodes- Seal the blocks that the Validator Nodes create. These include users who perform work to ensure the blocks produced by Validator Nodes are accurate. These provide security and safety to the Theta ecosystem. Checks are required to protect against malicious attackers and Guardian Nodes provide the required defence. In order to run a Guardian Node you need to fulfil a stake requirement of 1000 THETA tokens.
Let me know if you’re interested in another article covering How to setup a Guardian Node (later) and if it is worth it? Or perhaps a video
Edge Node- These include users who either share their excess bandwidth or those who relay video streams over the Theta network to earn TFUEL. Anyone with a computer could potentially run this and be rewarded in TFUEL.
Now that Consensus mechanism is taken care of, let's get back to the Mainnet 3.0.
The Mainnet 3.0 Whitepaper is available online, but I am going to provide an easy understanding of it. Sometimes, information on any whitepaper can be too much to process (however, it is strongly recommended to have a thorough understanding of the product you’re interested in).
This is my humble attempt at making things relatively easy and comprehensible to my readers.
Since 2020, Theta has been running on Mainnet 2.0 however, the launch of Mainnet 3.0 will see a major update in the Edge network. The Edge nodes are currently rewarded only for relaying videos resulting in low incentives which everyone is pretty much complaining about. Theta Mainnet 3.0 will give Edge nodes the ability to stake TFUEL and become Elite Edge Nodes to earn more token based on uptime mining and staking.
What is an edge node?
Edges node allows you to relay video streams over Theta Network and earn TFUEL for providing support to THETA.tv (also for any other upcoming video platforms using the Theta Network). You can also broadcast your own video streams and have them distributed over the Theta Edge Network thus achieving P2P streaming without the involvement of any centralised distribution network. (More on that in my previous article)
The two core changes that are highlighted in the Mainnet 3.0 whitepaper are listed below:
Upgrade of the Elite edge node
-This includes two aspects TFUEL inflation and TFuel staking
TFUEL Burn (Balancing the inflation- deflationary aspect)
-Smart Contract Locking and Service Quality Feedback Loop
Upgrade Of Elite Edge Nodes
TFuel Inflation
There is going to be a 4% inflation that will be rewarded to staked TFUEL. The whitepaper has kept it dynamic saying the inflation can range from 2- 4% however, it shall commence at 4% and will be adjusted as and when required. It has been designed to trigger economic balance and to provide liquidity in the system.
TFuel Staking
The Mainnet 3.0 will enable individuals to change their Edge node to Elite Edge node (which is the same as Edge Node with TFUEL staked on it). The newly inflated TFUEL will be the base salary for an elite node (the earnings will be based on the amount of TFUEL that is staked and its uptime score). Moreover, the Elite Edge node can also earn more through what is referred to as the Proof of Relay mechanism (this is when your edge node is given an opportunity to transfer data to another user). That TFUEL will come from platform partners directly and not from the TFUEL inflation pool. The two together make up the Dual Rewards to Elite Edge Nodes.
The reason behind this is to increase adoption of the edge nodes by guaranteeing income (Base Salary) and for it to act as a temporary sink. As the amount of TFUEL in the system increases (owing to the yearly 4% inflation), there will be an increased supply of TFUEL and this could push people towards liquidation driving the price down. However, when you provide users the opportunity of staking the token, you’re essentially disabling liquidation and restricting the supply in the moment thereby acting as a price control mechanism.
Uptime mining
Elite Edge Nodes are connected to Validator &/ Guardian nodes. This network ensures constant communication between the Validator and the Guardian as well as the Edge Node.
In order to maximize the uptime of the elite nodes which in turn will improve the availability of the network, Theta will provide incentives randomly.
Elite nodes will need to broadcast their BLS signature of the latest checkpoint block hash for the guardian nodes to aggregate. The sharing of this proves that the node was up and running when the corresponding block was produced and thus increasing uptime.
If any edge node doesn’t end up sending a proper signature, it is left out of the reward.
(If you're wondering what BLS signature is, don't fret. It is simply a cryptographic signature which allows user verification)
A subset of elite nodes is chosen randomly to receive the inflated TFUEL so in order to avoid missing the rewards, an elite node would need to stay online all the time, and ensure the correct signature is sent out if it is selected (at random). This provides incentive for elite node operators to maximize the uptime of their nodes, which is beneficial to the Theta network users.
The next change is TFUEL Burn
The Service Quality Feedback Loop
Theta’s business model is similar to that of CDNs with the exception of service payments being completely decentralized and transparent in nature. These payments are in TFUEL and recorded on-chain. Theta guarantees all platforms (the ones that utilize its infrastructure) reliable and smooth service in exchange for payments. Higher payers get higher priority. With the network constantly evolving, users paying larger amount of TFUEL receive priority from the edge nodes which essentially provides them guarantee that their content will reach individuals faster. This also works in balancing the network’s availability with the network’s demands.
A portion of the TFUEL payments to the network will be burned permanently, and the remainder will be split among the elite nodes that submitted a Proof-of-Relay. Initially, the protocol requires that at least 25% of each payment will be burned. As the availability on the network will increase we can expect additional burns in order to reduce the amount of payout and vice versa.
Smart Contract Locking
Smart contract locking has been introduced to make a portion of TFUEL non-recoverable, basically to take it out of circulation.
Content providers/streamers are going to need to lock up their TFUEL in smart contracts to make their payment (so you pay all of the TFUEL upfront). By, locking up more of the TFUEL, Theta hopes to reduce the chances of liquidation (similar to what they’re doing with staking). All these efforts are being made to ensure TFUEL has a stable high equity value.
In addition to the mentioned changes, Theta is set to increase the gas fee (transaction fees) as well. Presently, the transaction fees on Theta are nearly zero. After the proposed changes come into place, transaction fees will be revised to 0.3 TFUEL for send transactions, 20 TFUEL to deploy a smart contract and 1 TFUEL to interact with a smart contract. Theta thus aims to burn more TFUEL with the deployment of more and more smart contracts (NFTs, DeFi, Dapps, micropayments). The increased transaction fees are estimated to come into effect around 10th or 11th June and will be announced through the network's social channels.
So, all in all, Mainnet 3.0 offers TFUEL staking to act as temporary TFUEL sink, and increased transaction and network fees as the permanent sink to reach an eventual state where TFUEL utility value is maximized and stable.
Is Theta Network and TFUEL in particularly, set to sky-rocket. What are your thoughts? Do let me know in the comments below.
I need your love and support. Please give it a like or follow or subscribe so that I can keep writing what I love.
Socials
Twitter Youtube Odysee Publish0x Read.cash Substack Medium Loop Medium Torum Presearch Noisecash
Crypto Taps Pipeflare, GlobalHive, GetZen for some free crypto
Exchange on SwapSpace
For price updates, check Coinmarketcap or download the app on Apple/ Google
Join CoinMarketCap for Airdrops, Diamonds, Learn&Earn
On Telegram, Telegram(EN), Twitter, Reddit, Instagram, Facebook
Create your crypto Watchlist or track your Portfolio on Coinmarketcap
(Please note - This article might also show under my alter ego - Cyekmyster)