(Updated 13. September 2022)
This archived comparison examines THETA and TFUEL by use case, token supply, staking and historical performance.
Here's the short answer:
Although TFUEL had historically performed better, I preferred THETA because staking it created exposure to both assets.
Let's get into the details about what the difference between them is and how they have performed historically.
Theta Token and Theta Fuel
Theta Token (THETA) is the governance token on the Theta network. Theta Network is a decentralized streaming service. It's the decentralized version of a combination of YouTube, Twitch and Cabel TV. The native token, THETA, is a vital aspect of the entire system.
Governance tokens, like THETA, are similar to shares in a company - You get a say in what changes should be made to the network/business. All token holder can stake their THETA tokens and vote on proposals from developers etc.
In addition, you can stake THETA to earn a yield. The reward for staking THETA is TFUEL, automatically diversifying your capital. THETA has a max supply, indicating solid tokenomics. More on this later in the article.
Theta fuel (TFUEL) is the second type of token available on the Theta network. TFUEL is the "utility token" on the Theta network.
Theta Fuel (TFUEL) is paid to participants for joining the network and sharing their video streaming resources.
Theta fuel backs many other functions like the deployment of smart contracts, and incentives for relayers for sharing video streams.
TFUEL does not have a capped supply, and can theoretically speaking be forever inflationary.
In summary:
The Theta Network aims to develop a decentralized alternative to traditional, centralized streaming. THETA is the governance token, and TFUEL is the utility token.
Why I Considered Theta Token (THETA)
Theta targeted the large video-streaming industry with a blockchain-based alternative to centralized delivery. Holding THETA provided token exposure to the network's adoption.
Theta aimed to incentivize a global network of computers to contribute spare bandwidth and computing resources. Holding THETA conferred governance rights over future network proposals.
In 2017, Theta Network had a private token sale of around $20 million and sold 30% of Theta tokens. Its listed strategic investors included Samsung NEXT, Sony Innovation Fund, DCM, Sierra Ventures and Digital Media Investments.
THETA has a maximum supply, limiting potential inflation.
Why I Considered Theta Fuel (TFUEL)
The archived TFUEL analysis documents the investment case I considered. Its main points included:
Theta fuel (TFUEL) regulates microtransactions on the Theta network. Its utility meant it could, in theory, increase in value alongside network adoption.
Theta fuel is vital to the functionality of Theta Network; without its existence, the entire ecosystem would collapse.
Over 40% of the total supply of TFUEL was staked at the time. (source) This reduced liquid supply but did not determine price.
The top five richest wallets held 3.5% of the supply in the sample I reviewed, limiting concentration among those addresses.
Historical Performance Of Theta Token And Theta Fuel
I'll measure their performance from the bottom of the covid-crash in March of 2020. I'll show you the returns generated in the bullmarket, and how they have performed in the following bear market that we're currently in (writing in September of 2022).
THETA Historical Performance:
Theta token surged by almost fifty thousand percent in the bull market of 2020 and 2021. A hypothetical $1,000 purchase at the March 2020 low would have reached about $477,500 at the 2021 peak.
After the surge, THETA crashed by 93.5%. It might crash even further, as the bear market is still going. The $477,500 would have shrunk to $31,037.
TFUEL Historical Performance:
Theta fuel surged by almost one hundred thousand percent in the bull market of 2020 and 2021. A hypothetical $1,000 purchase at the March 2020 low would have reached about $966,500 at the 2021 peak.
After the surge, TFUEL crashed by 92%. As with THETA, it might crash even further in the short/mid-term because the bear market is still going.
The $966,500 would have shrunk to $62,822. That's roughly 2x overall performance of THETA.
Both tokens produced large gains over the selected period, and TFUEL's gain was higher. That comparison did not establish which token would perform better later.
Related historical analyses:
Conclusion: Why I Preferred THETA
Although TFUEL had historically performed better, I preferred THETA at the time because staking it created exposure to both tokens. I also considered a smaller direct TFUEL position alongside it.
None of this is financial advice. Do your own research, and remember that I'm not a financial advisor.