Theta Fuel

What is Theta Fuel (TFUEL)?

Theta Fuel, along with the Theta Token (THETA), is one of the two native tokens of the Theta blockchain network.

Theta’s goal is to let network users share bandwidth and resources on a peer-to-peer basis to relay video. In doing so, Theta users are rewarded, and video content delivery is effectively decentralized.

One of the main problems Theta Network solves is that existing networks struggle to satisfy the demand for high-resolution video streams. Attempting to deliver streams in 4K and 8K, especially in areas with poor infrastructure, causes data traffic jams. This manifests itself in the form of long loading and buffering times for viewers.

Theta, therefore, attempts to connect the content creator and consumer more efficiently. The Theta Fuel token plays a vital role in this process, serving as the network’s incentive, utility, and gas token.

When Was Theta Fuel Launched?

Theta Fuel was launched in 2019, two years after the launch of the Theta token. The latter predated the Theta mainnet, first going live as an ERC-20 token on Ethereum before being swapped over to the Theta mainnet.

When Theta tokens were swapped, holders were also airdropped TFUEL. The Theta Fuel token went into use immediately, powering transactions on the Theta blockchain.

The Theta Network has had several upgrades since its mainnet launch in 2019, with Guardian nodes and a unique multi-level consensus system coming into play the following year. Then, in 2021, Theta Mainnet 3.0 went live, and Mainnet 4.0 is expected at the end of 2022.

Who are the Founders of Theta Fuel?

Theta Network, and by extension, its two tokens, Theta and Theta Fuel, were founded by Mitch Liu and Jieyi Long.

Liu, a graduate of MIT and Stanford, is well known for co-founding video advertising firm Tapjoy and mobile game studio GameView Studios.

Long, Theta’s CTO, has patents in virtual reality live-streaming and instant replays for video games.

Alongside significant corporate backing, Theta is also advised by the likes of Youtube co-founder Steve Chen and Twitch co-founder Justin Kan.

How Does Theta Fuel Work?

The Theta Network uses a structure similar to a mesh. Nodes on the network are connected to each other and are categorized into three types:

• Enterprise Validator Nodes. These are nodes by enterprises that own and stake THETA tokens to validate transactions on the Theta Network. As per Theta Labs, Google, Sony, Samsung, and Binance are among the companies running Enterprise Validator nodes.
• Guardian Nodes. Implemented in Theta Mainnet 2.0, these nodes are responsible for checking that blocks produced by Enterprise Validators are accurate.
• Edge Nodes. These nodes perform the bandwidth sharing and deliver content on the network and are incentivized in TFUEL.

The Theta Network relies on Edge nodes closest to the viewer to do the work of video data caching and transmission. For this reason, Theta is designed to be more and more efficient as the network grows and more Edge nodes get on board.

For their vital bandwidth allocation and video relay services, Edge nodes are rewarded with Theta Fuel tokens.

What Makes Theta Fuel Unique?

Theta is regarded highly by many blockchain analysts and has made several breakthroughs since the project’s inception.

In 2018, the team developed a micropayment solution using layer 2. In 2020, they brought multi-level BFT to the consensus via Guardian nodes, and in 2021, Theta became compatible with Ethereum and its Turing-complete smart contracts.

In April 2022, the team released a whitepaper for Theta Mainnet 4.0. This upgrade will deploy the Theta Metachain, an interconnected network of blockchains. The reason for this upgrade is that the permissionless horizontal scaling of this system would allow massive gains in throughput and very quick, perhaps even subsecond, block finalization.

Theta is already compatible with Ethereum, and the main chain and all subchains will be interoperable with the Ethereum Virtual Machine (EVM).

Within this new structure, the demand for both THETA and TFUEL is projected to increase. In addition, THETA tokens will be required as collateral for any subchain, and TFUEL will be used as the gas token across the entire ecosystem.

While this proposed Theta Metachain upgrade appears similar to Cosmos Zones, Polkadot Parachains, and Avalanche Subnets, the Theta team has outlined certain key differences:

• Theta Metachain vs. Cosmos Zones. In Cosmos, each Zone can have different gas tokens and may not support EVM. Theta Metachain will use TFUEL across the board, all subchains stay EVM compatible, and asset transfers are done with a maximum of two “hops.”
• Theta Metachain vs. Polkadot Parachains. There is a limited number of Parachains, meaning an entry barrier in terms of cost, thanks to parachain auctions. Theta will not limit the number of subchains.
• Theta Metachain vs. Avalanche Subnet. Per Theta Labs, Theta Metachain has guaranteed deterministic finality, whereas Avalanche provides only probabilistic finality and requires synchronous timing.

How is the Theta Network Secured?

Theta Network is secured by a proof-of-stake consensus mechanism relying on Enterprise Validator nodes and checked by Guardian nodes for added security.

Proof-of-stake is now a common consensus among the top blockchain projects because it reduces reliance on computing power. Instead, it uses a more energy-efficient economic system of incentivization to ensure validators behave according to the protocol.

This incentivization, which comes in the form of rewards as well as punishment, is significant, considering the minimum stake for an Enterprise Validator is in the region of 10 million THETA tokens. Guardian nodes, meanwhile, have to stake at least 1000 THETA.

According to Theta Labs, there is a committee of 20-30 Enterprise Validator nodes and thousands of Guardian nodes forming a second layer of consensus.

The Theta Network’s proof-of-stake consensus mechanism is also Byzantine Fault Tolerant, which means it is resilient even if up to a third of consensus nodes misbehave.

What is the Use of TFUEL?

While the THETA token is perhaps better known in connection with the Theta project, the TFUEL token’s importance to the platform cannot be overstated.

TFUEL functions primarily as a gas token, required for every transaction on the network as well as for smart contract calls and NFT minting. Furthermore, relayers are incentivized for every video stream they relay to other users on the network, and Edge nodes are paid in TFUEL too.

As a matter of fact, the Theta 3.0 mainnet upgrade started allowing users to stake TFUEL to Edge nodes, converting them into Elite Edge nodes. These Elite edge nodes earn more TFUEL through their staked TFUEL, as well as through higher relay performance.

TFUEL is also used to incentivize Enterprise Validators and Guardians for staking. As such, while THETA is the token used in governance and for staking, TFUEL is what makes everything tick.

Who Controls Theta Fuel?

Theta Network is controlled by Theta Labs, a subsidiary of SLIVER.tv, founded by Mitch Liu and Jieyi Long. One of the Enterprise Validator nodes on the Theta Network is also run by Theta Labs.

How Much TFUEL is In Circulation?

At the genesis of the Theta Network, 5 billion TFUEL tokens were minted. There is no maximum supply cap, but the TFUEL tokenomics are controlled at a protocol level.

Theta Mainnet 3.0 introduced TFUEL burning to the protocol. Part of each TFUEL payment to the Edge nodes is burned at the protocol level; a mechanism intended to represent the cost of using an Edge node.

This burn mechanism adds deflationary pressure to TFUEL, counteracting the additional 2-4% inflation introduced in Theta 3.0. Elite Edge nodes earn a part of this inflation via a process called “uptime mining.”

The 5% inflation of TFUEL carried over from Theta 2.0 remains in place. This inflation continues to be directed toward Validators and Guardians as rewards.

How Do You Buy TFUEL?

TFUEL is an easy cryptocurrency to get a hold of since it is listed on many of the top exchange platforms in the world. You’re most likely to be able to buy it with stablecoins, but some exchanges offer to trade in fiat currencies like USD, KRW, IDR, and INR.

Is It Possible to Buy TFUEL Instantly?

Buying cryptocurrency on most centralized exchange platforms tends to be instant. The downside here is that your TFUEL tokens aren’t actually settled. Instead, they remain in the custody of the exchange, and you have to withdraw them to your own wallet in order to take a settlement.

How Do You Store TFUEL?

You can store TFUEL on an exchange, but events in 2022 have highlighted the risks of doing so. With the likes of FTX siphoning out client funds and custodial platforms Celcius and Voyager going bust, self-custody is a more attractive option. TFUEL tokens can be stored in the native Theta Wallet, or you can just use a wallet like Metamask and configure it for the Theta Mainnet.

Theta Fuel Energy Consumption

Theta Network is a proof-of-stake blockchain, which means validator nodes need a minimal amount of computing power. This is in stark comparison to proof-of-work, where a single mining operation could entail entire warehouses full of machines.

As a result, proof-of-stake networks are far less energy-hungry than proof-of-work blockchains like Bitcoin.

Theta does feature thousands of nodes overall, with up to 30 Enterprise validators and over 3000 Guardians, and Mainnet 4.0 will introduce subchains.

However, comparable blockchains with similar architecture running proof-of-stake consensus do not consume unreasonable amounts of power. Polkadot, for example, consumes only as much power as 7 average US households, despite its parachain architecture.

Is TFUEL a Good Investment?

Theta is a project that targets a very clear problem in the existing video delivery network and applies Web3 principles by decentralizing the process and allowing users to earn.

It is a very highly regarded project with significant backing from major corporations and shows technological ambition, which is constantly realized with frequent upgrades.

Theta Mainnet 4.0 is an exciting iteration for the network with the potential to broaden Theta’s horizons both literally and figuratively. While it is due to launch while the blockchain industry appears to be at a low ebb, a successful upgrade would be a very strong signal of project health.

If Theta can continue to grow and fulfill its vision of efficient global video content delivery, then the TFUEL token will be right there alongside it, powering every single transaction.