What is Livepeer (LPT)

Livepeer is a decentralized video protocol built on the Ethereum blockchain. Its original intention is to enable anyone to seamlessly integrate video content into applications using a decentralized approach at a fraction of the cost of traditional solutions. The decentralization of video processing is achieved by distributing the code conversion process to a network of node operators. This step is crucial as it ensures smooth delivery of video content to end users. Specifically, it involves obtaining the original video file based on factors such as device screen size or internet connection and converting it into the optimal format for each end user.

Livepeer leverages blockchain technology to process video content, making it reliable and affordable. This technology utilizes game theory, cryptocurrency economic incentives, and smart contracts to promote active engagement among stakeholders. Its native asset, the Livepeer token (LPT), is used to securely coordinate and distribute video processing tasks among network participants.

Introduction

People are increasingly relying on social media, especially after the outbreak of the pandemic, coupled with the large growth of the creator economy. As a result, over 82% of internet bandwidth in 2021 was used for video-related content.

Supported by thousands of distributed nodes, the Livepeer network provides access for video application developers and creators, enabling them to access secure, high-quality, and cost-effective encoding infrastructure without high costs. Founded in 2017, the Livepeer network has processed over 150 million minutes of video to date.

How does the Livepeer network work?

Built on Ethereum, Livepeer is essentially a network that connects demand for video processing with service providers. Compared to current centralized solutions, Livepeer uses the native token LPT to incentivize network participants to provide reliable, secure, and affordable video transcoding services.

There are two main stakeholders in the Livepeer network: coordinators and delegators.

Coordinators

Anyone with video mining equipment can stake their LPT on the Livepeer network and undertake video processing tasks. As compensation for providing services, they earn a share of the video processing fees in the form of LPT and ETH. These network participants are called coordinators.

Delegators

People without video mining tools or experience in video processing can still participate in the network by delegating or assigning their LPT to node operators who have the appropriate tools and expertise. These node operators process videos via the Livepeer Explorer. These network participants are called delegators.

What is LPT?

The native asset of the Livepeer network, the Livepeer token (LPT), is an ERC-20 token used to ensure security, distribute video processing tasks among network participants, and incentivize active participation in various roles on the Livepeer network. The more LPT tokens that support network functions, the more stable, secure, and robust the network becomes.

The work assigned to coordinators depends on the amount of LPT they have staked (their own or delegated), as well as their geographic location and reliability. Since more delegated tokens mean more work, and more work yields higher rewards, coordinators compete to attract more delegators.

At the end of each round (i.e., daily), the Livepeer protocol mints new Livepeer tokens according to a specified inflation rate. Livepeer is a “stake-based” protocol, meaning that rewards distributed to each participant are proportional to their contributions. Participants who actively engage in a round—whether by running nodes or staking tokens—can earn a certain share of the rewards. Those who do not participate actively in a given round will not receive rewards.

Coordinators can also gain additional benefits: as commissions for running decentralized infrastructure, they receive a portion of the payments made by delegators.

With this system, active participants can increase their benefits within the network. Conversely, non-active users who do not participate in rounds will see their rights to code conversion diminish over time. In other words, the larger their LPT share, the more work they receive, and ultimately, the greater their rewards.

The inflation rate used to determine reward distribution also incentivizes user activity. The percentage of new LPT in each round’s rewards depends on the total amount of LPT invested in the network’s successful operation. The higher the ratio, the lower the inflation rate, helping existing tokens retain greater value. Therefore, token holders are naturally motivated to stake more to earn higher returns.

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Summary

Livepeer has designed a solution that delegates video processing tasks to trusted individuals. With a decentralized video protocol, Web3 projects and companies can avoid high and arbitrary video processing costs and censorship, providing better video content to audiences.

**$LPT **