The next evolution of Theta’s blockchain has been announced and is planned to go live in Q4 2022. Theta Network’s previous mainnet upgrade went live on June 30th, 2021. We covered that upgrade in our earlier article here.
The Theta 4.0 mainnet upgrade has been coined the "Chain of Chains" as Theta Network introduces their Metachain. This allows users in the Theta ecosystem to create, operate, and manage their own subchains. In addition to this, Theta Network is looking to further upgrade their Elite Edge Nodes and to extend their Live Stream Support across the platform.
The introduction of Theta’s new Metachain brings a new dynamic to Theta’s already expanding ecosystem. The Metachain is a distribution of one "main chain" connected to a theoretically unlimited number of user-made subchains. ThetaLabs will not be involved in the monitoring or approval of subchains. This makes the process permissionless, allowing anyone in the Theta Ecosystem to register and manage their own subchain. These advancements to the Theta Network will support cross-chain asset transfers between subchains and the main chain as well as to other Layer 1 networks (such as Binance Smart Chain or Ethereum).
Communication between subchains will be dependent on the main chain through interchain messaging channels (IMC). For simplicity, subchains are unable to communicate (send transactions) directly. Rather, subchains must use the main chain as a bridge, so at most there are two transactions to move assets from one subchain to another.
Subchains will utilise the two token structure (fee token and governance token) that is currently being used to power Theta’s main chain. The fee token for all subchains will be TFUEL. However, subchain creators are able to dictate how much in gas fees users are required to pay. The current cost of gas fees on Theta’s main chain is 0.3 TFUEL.
Subchain creators can then customise this gas fee to be a fraction of the cost of a main chain transaction. Additionally, the governance token for subchains will not be native to that subchain. Instead, the governance token will be a TNT20 token native to Theta’s main chain. This was decided due to the benefits it provides to subchain security. Holders of the main chain TNT20 governance token will be able to mitigate the effect of subchain attacks (where a majority of subchain validators are compromised) and penalise attackers before they can escape with the stolen assets.
Theta’s utility will also be enhanced through the Mainnet 4.0 upgrade due to a number of requirements essential to the creation of a new subchain. When creating a new subchain, individuals will be required to deposit THETA into a smart contract on the main chain as collateral for their subchain.
Similarly to Theta’s main chain, subchain operators also have to stake a specific amount of THETA to become a validator node and secure blocks on the subchain. However, the Theta network has decided that "THETA collateral only grants a node the validator candidacy status for a subchain."
To unlock the full validator status on a subchain, operators will also have to deposit a sufficient amount of the subchain’s TNT20 governance token into a smart contract on the main chain.
Currently, over 64% of Theta’s supply is staked on the network. The creation of subchains and their reliance on the THETA deposited on the main chain to maintain subchain integrity and security should ultimately increase the overall locked up THETA. This should lead to a smaller active supply of THETA, which can lead to less selling pressure across exchanges.
Theta’s Video Application Programming Interface (API) is a paid service that allows developers to build video into any application with only a few lines of code. Theta’s Video API currently only offers developers the ability to upload pre-recorded videos. Thetalabs schedules that in Q2 2022 they will be adding live streaming capabilities to their Theta Video API. This move will allow live streams to be plugged into any platform, pushing Theta’s products through to millions of users worldwide.
Additionally, Theta Network will be adding an analytics section to Theta’s Video API dashboard. This creates a more attractive product for content creators who will be able to check video impressions and important statistics to advance their own content. This will enable content creators to tailor their videos for larger audiences, enriching their experience and bringing more attention to Theta’s Video API product.
In the month leading up to the June 30th, 2021 Mainnet 3.0 upgrade, both THETA and TFUEL experienced increased volatility. Mapping both assets' percentage changes against bitcoin’s throughout the month of June shows how large the THETA and TFUEL price swings were given the market’s (bitcoin’s) current conditions.
THETA was up over 55% for the month of June leading up to the 18th, a period in which bitcoin was up only 3% for the month. However, these levels were unsustainable as all gains were wiped away leading up to the launch of Mainnet 3.0, dipping as far as 19% on the 23rd of June.
TFUEL experienced similar price movements, but on a grander scale. TFUEL rose to an all time high of $0.6815 on June 9th (according to Coingecko) which was an increase of over 120% for the month. In a similar fashion to THETA, these gains were very quickly wiped, but still finished the month up approximately 25%. However, the Mainnet 3.0 upgrade introduced TFUEL’s staking mechanism. This means that much of TFUEL’s positive price action leading up to the launch can be attributed to this (THETA staking was introduced before Mainnet 3.0).
For more details, the full Theta 4.0 Mainnet Whitepaper is linked here. Theta Network will be rolling out updates throughout the course of 2022 with the main goal for the Network to be completely upgraded in Q4.
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