What is Theta and How does It Work? – 2023

Introduction

Theta is the software that seeks to incentivize the global network of computers to operate the decentralized video streaming platform. Today, content delivery networks (CDNs), geographically located networks of operators, are paid to deliver video stream content to end-users.

And it’s due to restricted locations, and existing CDNs can not keep up with increasingly high-quality streams. And it allows its global pool of users to relay videos by offering their spare bandwidth and computing resources and rewarding them for responsibility.

As extra users join the Theta network, more bandwidth is available, thus improving the streaming quality of the videos on the web. Also central to running the operations on its blockchain. Also, it boasts two native cryptocurrencies and its coin to vote on changes in the protocol and TFUEL for executing transactions. Theta is also open-source software. It claims that it increases the potential for anyone to create new applications and services on top of it.

How Does Theta Work?

Theta measures the rate at which an option’s price is expected to decay for each day that passes, assuming that all other factors remain the same. This rate of decay tends to accelerate as the option approaches its expiration date, a phenomenon often referred to as “time decay.”

Here’s how theta works for options buyers versus options sellers:

Options Buyers

If you’re the holder (buyer) of an option, theta can work against you. Each day that passes reduces the amount of time for the option to become profitable (or more profitable if it’s already in-the-money). For instance, if you own a call option with a theta of -0.05, the extrinsic value of your call option will drop by 5 cents per day, all other things being equal.

Options Sellers

If you’re the writer (seller) of an option, theta can work in your favor. The premium you received when you sold the choice gradually decays as time passes. That’s because with each passing day, there’s theoretically less time for the underlying asset to move in a way that would make the option profitable for the buyer. If the option is out-of-the-money at expiration, it will expire worthless, and as the seller, you get to keep the entire premium received up front on trade entry.

It’s important to note that theta is just one factor influencing the price of a given option. Other factors include the price of the underlying asset, the strike price of the choice, the risk-free interest rate, and implied volatility (i.e. vega).

Also, it’s important to keep in mind that like the other Greeks, theta is dynamic, and can change over time. Theta generally gets larger (in absolute value) as an option gets closer to expiration.

How do Theta Efforts?

1. Enterprise Validator Nodes

• The companies who stakes the THETA tokens for the proper process transactions on the network. And its current Validator Nodes includes Google and Samsung.

2. Guardian Nodes

• Users who perform work ensure that transaction blocks propose by the Enterprise Validator Nodes are accurate.

3. Edge Node

• Users who either share their bandwidth and relay video streams over its network in return for TFUEL.

• Also, its network allows developers to build decentralized applications on top of its blockchain. And examples include royalty distribution applications and crowdfunding mechanisms.

• Also, network users can download an official Theta Wallet app to hold or stake their THETA and FUEL tokens.

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