Livepeer is a decentralized live video streaming protocol developed on the Ethereum blockchain, allowing users to transcode videos in real-time upon request.

Based on a scalable Platform-as-a-Service (PaaS), Livepeer is suitable for startups and organizations looking to add live or on-demand video to their products. At its core, it is an Ethereum-based video transcoding protocol (reformatting videos to suit various bandwidths and devices) designed to provide economical, secure, and reliable infrastructure to meet the high demand for video streaming today.

Unlike other traditional video streaming service providers (such as YouTube), Livepeer does not store, manage, or transmit videos. It utilizes unused CPU resources, allowing users to broadcast live videos or integrate video streams into their applications and websites, greatly simplifying the process for video publishers to distribute videos and offering a more cost-effective solution.

Additionally, the network employs a modified Delegated Proof of Stake (DPoS) consensus mechanism, where instead of mining, new blocks are verified through token staking. Its native token is LPT, a work token based on the ERC-20 standard of the Ethereum blockchain, which users can use to secure work on the network.

1. How it works

At the heart of Livepeer’s operation is its Ethereum-based video transcoding protocol, which distributes video transcoding tasks through a decentralized network. This protocol aims to provide an economical, secure, and reliable infrastructure to address today’s high demand for video streaming.

Here’s a detailed look at how it works:

1. Video Transcoding Process
2. Sending the Video Stream

Video content creators or broadcasters send the original video stream to the Livepeer network. These broadcasters can be individuals, companies, or any entities requiring video transcoding services.

2. Receiving and transcoding task allocation

In the Livepeer network, nodes known as “orchestrators” receive these video streams. Orchestrators are nodes that contribute their computing resources (CPU/GPU) and network bandwidth to participate in network activities.

Orchestrators perform initial processing on the received video streams and are responsible for assigning transcoding tasks to specific transcoders. These transcoders are typically GPUs or other specialized hardware capable of video encoding.

3. Transcoding execution:

Transcoders receive the video streams from the orchestrator and convert the videos from their original format to formats suitable for different screen sizes and network speeds as needed. This includes adjusting resolution, bitrate, and changing the encoding format.

During the transcoding process, the video files are re-encoded to ensure compatibility and optimal playback on target devices.

4. Transcoded video return:

Once the video transcoding is complete, the transcoders send the transcoded video streams back to the orchestrator. The orchestrator reviews these video streams to ensure quality and then returns the final video stream to the video broadcaster or directly publishes it to the specified platform.

5. Fees and Incentives:

In the Livepeer network, broadcasters need to pay Ether (ETH) as a fee for the transcoding services. These fees are paid to the orchestrators and transcoders as compensation for providing their computing resources and bandwidth.

The amount of LPT tokens held by orchestrators and transcoders also determines how many transcoding tasks they can receive. The staking amount of LPT tokens is proportional to the number of transcoding tasks awarded.

6. Consensus mechanism

Livepeer employs a special consensus mechanism that combines Ethereum’s security with a layer specifically designed for its network operations to handle task assignments and reward distribution.

This consensus mechanism is mainly divided into two layers. The following is a detailed introduction to the two layers of consensus mechanisms:

Ethereum Blockchain Layer

• The first layer of consensus mechanism in the Livepeer network relies on the Ethereum blockchain. At this layer, all transactions and smart contract interactions are recorded and verified. This includes transactions of LPT tokens, staking and unstaking events, as well as payments and fee processing.
• Leveraging the security of the Ethereum blockchain, this layer ensures that all financial operations within the Livepeer network are transparent and tamper-proof. By utilizing Ethereum’s widespread acceptance and stability, it provides a fundamental security guarantee.

Delegated Proof of Stake (DPoS) Layer

• The second layer of the consensus mechanism is based on Delegated Proof of Stake (DPoS), specifically handling the verification and reward distribution related to video transcoding tasks. In the DPoS model, LPT token holders can choose to become “Orchestrators” or delegate their tokens to other Orchestrators.
• Orchestrators, as the verification nodes of the network, are responsible not only for video transcoding but also for verifying the transcoding work of other nodes. This layer of the consensus mechanism ensures that transcoding tasks are completed correctly and that the results meet the expected quality standards.
• Orchestrators verify the processing results of video streams and participate in the generation and distribution of new LPT tokens. This mechanism promotes the proper functioning and development of the network, encouraging participants to maintain honest and efficient behavior.

Practical Operation of the Consensus Mechanism

• In the Livepeer network, when an Orchestrator completes a transcoding task, it can either verify the correctness of its work itself or delegate it to other Orchestrators for cross-verification. Since verifying all work can be very costly, Livepeer uses random sampling to check the accuracy of the work, significantly reducing operational costs while maintaining the security and reliability of the network.
• LPT tokens play a crucial role in this process, acting as a “security deposit.” If an Orchestrator behaves maliciously (e.g., provides incorrect transcoding results), its staked LPT may be forfeited, increasing the risk cost of malicious behavior.
• Through this two-layer consensus mechanism, Livepeer can ensure the secure and reliable operation of the network while maintaining efficiency and cost-effectiveness. This structure leverages the powerful features of the Ethereum blockchain and optimizes operations specific to video transcoding services through the unique design of the DPoS layer.

7. LPT Token

The LPT token is the native token of the Livepeer network, based on the Ethereum blockchain’s ERC-20 standard.

Purpose and Function

The LPT token is used to incentivize network participants, including video transcoders (referred to as “orchestrators” within the network) and token holders (“delegators”). Orchestrators are responsible for handling video transcoding tasks, while delegators support specific orchestrators by staking LPT tokens, thereby helping to maintain network security.

Voting and Governance

Users holding LPT tokens can participate in the governance of the Livepeer network, voting on the future development directions and protocol updates.

Economic Model

The total supply of LPT tokens is 22,858,012, with approximately 12.35% held by the founding team, unlocking after three years. About 19% of the tokens were sold in a presale, and 63.437% are allocated for public trading. Additionally, 0.213% were given to early advisors and contributors who helped Livepeer get started, and 5% are reserved for maintaining and developing the Livepeer platform to ensure the project’s longevity.

LPT is an inflationary token, meaning there is no maximum supply limit. New LPT tokens are created and distributed to active network participants, such as orchestrators who transcode video streams and the delegators who support them. This reward mechanism encourages more users to join and support the network, rewarding active participants over time and providing incentives for new participants. This also increases the network’s decentralization and security.

The inflation rate of LPT is not fixed but dynamically adjusted based on the network’s staking rate, which is the percentage of circulating LPT staked to support the operation of orchestrators.

Token Distribution

• Total supply: 22,858,012 LPT
• Founding team: 12.35% (unlocked after three years)
• Presale: 19%
• Public trading: 63.437%
• Early advisors and contributors: 0.213%
• Platform maintenance and development: 5%

Inflation Mechanism

The LPT token’s inflation mechanism creates new tokens to reward active network participants, adjusting dynamically based on the network’s staking rate to balance incentives and network security.

8. Acquiring Tokens

Network Participation Rewards

The primary method of acquiring LPT tokens is by participating in Livepeer network’s video processing tasks, particularly as an Orchestrator or Transcoder. These roles involve performing video transcoding tasks and providing the necessary computational resources and bandwidth to the network in exchange for LPT tokens as rewards.

Staking and Token Rewards

Users can also participate in network maintenance by staking LPT tokens to an Orchestrator, a process known as Delegating. Delegators support specific Orchestrators by staking their tokens and receive a portion of the transcoding task earnings proportional to their staked amount.

Initial Token Distribution

At the launch of the Livepeer network, initial token distribution occurred through public sales, private placements, or Initial Coin Offerings (ICO). This provided early investors with opportunities to acquire LPT tokens.

Community and Developer Incentives

The Livepeer community may also reward its members and developers with LPT tokens through various incentive programs, such as bounty tasks, development grants, or creative competitions. These activities aim to foster technological advancement and community engagement within the network.

9. Livepeer Ecosystem

1. Delegators
   
   Delegators in the Livepeer ecosystem are individuals or entities who stake their Livepeer tokens (LPT) into the network to participate in network consensus and earn rewards. They delegate their LPT to node operators who run Livepeer software and perform transcoding tasks on the network. In return for their delegation, delegators receive a portion of the node operator’s rewards.

2. Orchestrators
   
   Orchestrators in the Livepeer ecosystem are node operators who provide transcoding services to the network. They run Livepeer software to transcode videos and distribute video segments across the network. Orchestrators compete with each other to perform transcoding tasks and earn service fees. By holding their own Livepeer tokens (LPT), they also participate in network consensus and can earn additional rewards when selected to validate transactions and create new blocks on the Livepeer blockchain.

Node Operators

Node operators are responsible for processing video sources and converting them into various formats to suit different devices and network configurations. They are the backbone of the Livepeer network. By participating in the network, they receive benefits in the form of Livepeer’s native token, LPT.

Transcoder Operators

These operators are selected to process videos and transcode them into various formats. Besides the benefits of network participation, they can also receive payments for their transcoding services.

Video Producers

Individuals or businesses that create video content and provide it to the Livepeer platform for delivery and processing are known as video producers. To ensure their content is delivered in high quality and can reach a broader audience, they may opt to pay for transcoding services.

Users

Users are those who watch video content distributed through the Livepeer network. Without needing specialized hardware or software, they can access and enjoy high-quality video streams via various devices and internet connections.

Video Miners

Video miners in the Livepeer ecosystem are individuals who provide computational resources to process and transcode video streams. By participating as video miners, they help ensure the network’s scalability and reliability. In return, they earn LPT as a reward for their contributions. The amount of LPT they receive is proportional to the processing power and bandwidth they provide to the network.

Token Holders

Token holders have the ability to participate in network governance by voting on protocol upgrades and changes. They can also earn a portion of the network’s transaction fees as rewards. All transactions and interactions within the Livepeer ecosystem are recorded on the Ethereum blockchain, ensuring transparency. This transparency guarantees that everyone within the ecosystem can rely on the network and its provided services.

10. Livepeer Team / Partnerships / Funding / Investments

Team

Livepeer was launched by Doug Petkanics and Eric Tang in March 2017. It operates as an open-source protocol on GitHub, where developers are free to contribute to the core code. On the corporate side, Livepeer Inc., co-founded by Petkanics and Tang, serves as the legal entity behind the project. Doug Petkanics, serving as CEO, brings engineering and entrepreneurial expertise, while Eric Tang, the CTO, has a strong technical background. The team comprises individuals with diverse skills in technology, business development, and blockchain, all dedicated to creating a decentralized solution for video streaming.

Partnerships

Livepeer has established several partnerships to promote the adoption and use of its technology. These include:

• ETHDenver: Livepeer collaborates with ETHDenver to provide video infrastructure for the world’s largest Ethereum hackathon.
• DLive: A decentralized streaming platform, DLive partners with Livepeer to offer a decentralized and more scalable video infrastructure for its users.
• Hashed: As a cryptocurrency investment firm, Hashed has invested in Livepeer and collaborates to advance the adoption of decentralized video infrastructure.
• Parity Technologies: In partnership with Parity Technologies, Livepeer aims to provide secure and scalable infrastructure for decentralized video streaming.
• Band Protocol: A decentralized oracle platform, Band Protocol works with Livepeer to provide secure and decentralized data for video streaming applications.

Funding

Livepeer has raised a total of $48 million across four funding rounds. The most recent round was a Series B-II on January 5, 2022, raising $20 million. Investors include Alan Howard, Digital Currency Group, Northzone, Tiger Global Management, and Warburg Serres Investments. Besides public funding rounds, Livepeer may have also conducted other private or seed funding rounds.

Acquisitions and Investments

• Acquisitions: Livepeer acquired MistServer, a streaming server solution, on November 8, 2021.
• Investments: Livepeer invested in the Web3 Working Group through a seed round completed on December 1, 2022. This demonstrates Livepeer’s commitment to not only its own development but also to supporting other technologies and projects within the ecosystem.

11. Project Advantages

1. High-Quality Video: Livepeer uses blockchain technology to create a decentralized network of nodes that perform video transcoding, resulting in high-quality video streams.
2. Community-Driven Development: As an open-source project, Livepeer’s development is driven by its developer and user community, fostering a more user-friendly and innovative platform.
3. Token Incentives: Livepeer uses its native token, LPT, to incentivize participants to contribute to the network. For instance, transcoders are rewarded with LPT tokens for providing high-quality video streams.
4. Privacy: Livepeer allows users to stream video content without revealing their identity, as it operates on a decentralized network. This enhances privacy compared to centralized video streaming platforms, which may collect personal information for advertising or other purposes.
5. Scalability: Livepeer is designed to scale as the network grows, meaning it can handle an increasing number of users and video streams without compromising performance.
6. Reduced Latency: The decentralized network of nodes in Livepeer helps reduce video streaming latency, resulting in a smoother and more responsive video playback experience.

Project Disadvantages

1. Competition from Centralized Platforms: Livepeer faces competition from centralized video streaming platforms like YouTube, Twitch, and Facebook. These platforms have significant advantages in resources and market share, which may make it challenging for Livepeer to achieve widespread adoption.
2. Regulatory Risks: The regulatory environment for decentralized platforms is uncertain. Governments may introduce regulations that negatively impact the use and adoption of Livepeer.
3. Security Risks: Like any decentralized platform, Livepeer is susceptible to hacking or other malicious activities. Its decentralized nature may make it more vulnerable to such attacks, posing risks to user data and funds.
4. Technical Complexity: The technical complexity of the Livepeer platform might make it difficult for non-technical users to understand and use effectively. This could limit adoption, particularly among individuals unfamiliar with blockchain technology.
5. Limited Use Cases: Currently, Livepeer’s primary use case is decentralized video streaming. It is unclear to what extent the platform will be used for this purpose. If the platform does not achieve widespread adoption, it may struggle to realize its full potential and provide a return on investment for users.
6. Dependence on Ethereum: Since Livepeer operates on the Ethereum network, it relies on the stability and security of the Ethereum blockchain. Any issues with Ethereum could negatively impact Livepeer and its users.
7. Limited Decentralization: Although Livepeer aims to be a decentralized platform, if a few nodes end up controlling the majority of the network’s computing power, it could become centralized over time. This could undermine the platform’s decentralization and increase the risk of malicious activities.

12. Future Development Forecast

By the End of 2024

The price of LPT (Livepeer Token) could reach a high of $14.774, attracting more blockchain investors.

2025 Price Prediction

The live video streaming market is rapidly evolving. The Livepeer team aims to leverage this trend by promoting decentralization throughout the system. With significant updates and interesting new features, the price of LPT could reach $19.866 by 2025. If the token avoids major volatility, the average trading cost might be around $16.811. However, if bearish sentiment prevails, the price could drop to $14.189.

2026 Price Prediction

According to our analysts, the price of LPT in 2026 could range between $18.25 and $25.66, with an average price around $21.87.

2027 Price Prediction

Our analysts predict that the price of LPT in 2027 could range between $23.94 and $31.10, with an average price around $27.31.

2028 Price Prediction

For 2028, our analysts forecast that LPT could range between $35.26 and $47.86, with an average price around $41.61.

2029 Price Prediction

According to our analysts, the price of LPT in 2029 could range between $42.16 and $55.18, with an average price around $48.01.

2030 Price Prediction

Our analysts predict that by 2030, the price of LPT could range between $50.21 and $65.27, with an average price around $57.91.

13. Project summary

The Livepeer project represents an innovative integration of video streaming and blockchain technology. It leverages blockchain’s decentralized nature and incentive mechanisms to transform the traditional video streaming industry, aiming to reduce costs, enhance quality, and improve privacy protection. Despite facing challenges related to competition, technology, and regulation, Livepeer has the potential to disrupt the video streaming sector as blockchain technology continues to mature and market demand for decentralized services grows. In the future, Livepeer must continue to innovate, expand its use cases, and ensure the stability and security of its network to realize its vision in the decentralized video services domain.

Disclaimer:

1. This article is reprinted from 链茶馆. The copyright belongs to the original author [茶馆小二儿]. If there are any objections to the reprint, please contact the Gate Learn team, and the team will handle it promptly according to the relevant procedures.

2. Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.

3. Other language versions of the article are translated by the Gate Learn team and may not be copied, disseminated, or plagiarized without mentioning Gate.io.