Livepeer

What is Livepeer (LPT)?

Livepeer is an Ethereum-based decentralized video infrastructure that allows anyone to integrate video content into an application at a fraction of the normal cost. It aims to increase the reliability of video streaming while also bringing down costs by up to 50x.

Yet another technology project aiming to disrupt the Web2 status quo, Livepeer, is attempting to decentralize video processing, which is technical and often expensive.

Thanks to the creator economy and social media getting a pandemic-related boost, video content has come to dominate the internet’s bandwidth. However, transcoding—the process of reformatting raw video for end users depending on their device and bandwidth—remains predominantly centralized.

Livepeer attempts to change the industry’s landscape by decentralizing the transcoding and video distribution processes, with its native LPT token playing a key role in incentivizing network participants.

Who are the Founders of Livepeer?

Livepeer is an open-source protocol backed by Livepeer Inc. The company was founded by Doug Petkanics and Erin Tang.

Petkanics is an alumni of the University of Pennsylvania and has worked for firms like Groupon and Accenture. He also co-founded Hyperpublic in 2010, which Groupon later acquired. Petkanics also co-founded Wildcard, a publishing platform and web browser.

Tang graduated from Carnegie Mellon University with an electrical and computer engineering degree. Having worked previously for Next Jump and Clickable, he joined forces with Petkanics to found Hyperpublic.

The pair have been collaborating on Livepeer since 2016 and launched the platform in 2017.

How Does Livepeer Work?

Livepeer, as a protocol, is designed for three main groups, including developers, users, and broadcasters.

Developers who build applications that include live or on-demand video can use Livepeer to power their video functionality. Users who want to stream video content of any kind can use applications built on Livepeer to do so. With large audiences and high streaming bills, broadcasters such as Twitch can reduce costs and overhead with Livepeer technology.

Video flow on Livepeer begins with users who can record video or begin a stream. The live video, along with broadcaster fees, is sent by the user’s app into the Livepeer network. In addition, Livepeer transcodes this video into all the formats and bitrates required by consumers of the content.

There are two key actors called “Orchestrators” and “Delegators” in the Livepeer network that ensure the quality of the live stream.

Orchestrators run software that allows the contribution of their computer’s resources, such as CPU, GPU, and bandwidth, towards transcoding and distributing video. In return, they are compensated in fees, which can be paid in crypto like ETH or stablecoins like DAI.

Anyone can be an orchestrator on Livepeer, provided they earn or acquire a sufficient LPT token balance. The higher the orchestrator’s LPT balance, the more resources they are allowed to provide for the network.

Meanwhile, delegators are LPT holders who may not have the time or technical expertise to be orchestrators. They can “stake” their LPT tokens towards orchestrators they think are doing a good job and, in return, share in that orchestrator’s rewards.

What Makes Livepeer Unique?

Livepeer is unique in how it disrupts the centralized video transcoding and distribution processes and empowers all stakeholders in true Web3 fashion.

The LPT token’s inflation also goes straight to delegators and orchestrators. This gives orchestrators a powerful economic advantage over traditional centralized video providers since the token value offsets what they need to charge broadcasters. But, thanks to the token’s value, they can simply charge less for their services.

How is the Livepeer Network Secured?

Livepeer’s own network relies on orchestrators and delegators to provide high-quality video. However, blockchain technology also plays a role, and the LPT token resides on Ethereum. This network is already very decentralized, with over 5100 delegators in play.

LPT transactions and balances, meanwhile, are secured by Ethereum’s proof-of-stake consensus, wherein validators who stake ETH create blocks and validate them.

Validators who stake more ETH have a greater probability of earning the block reward, which results in many of them bonding far more than the hefty 32 ETH minimum. This also helps to increase the power of the penalty for bad behavior, such as slashing. Slashing is when a validator doesn’t behave according to the protocol and has their bonded ETH confiscated.

Between the slashing and the income via block rewards, the vast majority of Ethereum’s validators are incentivized to behave as the protocol dictates.

What is the Use of LPT?

The LPT token is used by delegators and validators and staked to unlock orchestrators’ ability to do more transcoding and video distribution. LPT stakers receive the tokens, increasing the economic advantage of those who participate actively over those who don’t.

Who Controls Livepeer?

Livepeer is controlled by Livepeer Inc., although it is an open-source protocol to which anyone can contribute.

The open-source nature of the protocol is one of the first steps toward full decentralization, which the Livepeer team is working toward.

How Much LPT is In Circulation?

New LPT tokens are minted in rounds, where one round is equal to 5760 Ethereum blocks. This equates to approximately 20 hours and 20 minutes per round, and delegators and orchestrators are rewarded each round.

Livepeer currently has an inflation rate of 0.0199% and a total supply of over 26 million LPT tokens. The inflation rate isn’t static, however. Instead, it adjusts automatically depending on what percentage of LPT tokens are staked out of the total circulating supply.

This ratio is called the participation rate, and Livepeer targets a participation rate of 50%. Inflation increases by 0.00005% for each round that the rate drops below 50% and decreases by the same amount when participation exceeds 50%.

How Do You Buy LPT?

You can buy LPT on various platforms, including most top-tier centralized exchanges. It’s also possible to use Ethereum-based decentralized exchanges like Uniswap to pick up LPT tokens.

How Do You Store LPT?

You can store LPT tokens in an Ethereum-compatible wallet. It might be easiest to stake your LPT on Livepeer if you have a Web3 hot wallet that allows you to connect to the interface easily. This is also possible with hardware wallets like Ledger and Trezor.

It is also possible to store your LPT tokens on an exchange, but that means you can’t participate in the network or gain a share of the token’s inflation without staking from your own wallet.

Is LPT a Good Investment?

Livepeer is one of a cluster of blockchain-based projects attempting to hasten the transition of the internet into a more equitable age.

Corporations that have cornered the web to a monopolistic extent have enslaved users to their profits, but technologies like Livepeer show that decentralization can be far more cost-efficient.

The potential of Livepeer is clear as day, and the network already benefits from significant decentralization with over 5000 delegators. However, adoption remains the yardstick by which success will be measured.

Livepeer is used by Lenstube, Kavarii, the402, LiveSpace, and The Lot Radio, among others. As this list grows and Livepeer continues to expand its own technology and tech ecosystem, the LPT token has every chance to find significant demand.