Livepeer (LPT) - Spotlight by Phemex

 

Livepeer

Video streaming is one of the most important aspects of the internet and one of the most popular ways users consume content in 2022.  Unfortunately, video streaming, especially live streaming, has traditionally been quite expensive and difficult for companies given the massive amount of storage and bandwidth required. In fact, 80% of all internet bandwidth worldwide is consumed by video streaming. One project that is hoping to change this is Livepeer (LPT), a video streaming protocol that provides developers and broadcasters decentralized video transcoding and distribution services.

What is Livepeer?
Livepeer is a decentralized streaming protocol that supports the streaming of both live videos and on-demand videos. Livepeer provides the back-end video transcoding and distribution infrastructure that developers can build applications on. Livepeer is not a video streaming service and does not have a website or application users can visit to watch videos. Livepeer is less like Netflix and more like Amazon Web Service (AWS), the company that manages all of Netflix’s databases, storing, and video transcoding.

Current video transcoding and distribution companies are typically centralized and expensive. Many companies are unable to afford the expensive prices demanded by companies like AWS. And many blockchain projects are unable to integrate these transcoding services into their applications as the existing infrastructure is centralized and built off-chain. Livepeer is decentralized, open-source, and built on the Ethereum blockchain, thus allowing any Ethereum project to easily integrate Livepeer and video streaming into their application. Furthermore, Livepeer’s innovative decentralized network allows them to offer cheaper and more reliable services than the traditional video transcoding and distribution market.

How Does Livepeer Work?
  • Livepeer Media Server
The Livepeer Media Server (LPMS) is an open-source and decentralized media server and video transcoder created by Livepeer.

Video transcoding is the act of taking video and audio inputs and transcoding them into alternate encodings, bitrates, and delivery formats. This is a necessary part of video streaming as it ensures the video recorded can be played on any screen and device, as each screen has its own formats and bandwidths.
  • Livepeer Network
The Livepeer Network manages the distribution of the video. The Livepeer Network is an open network that consists of individual computers and users acting as “nodes.” Each node has a different purpose and function. There are four main node types:
  • Broadcaster: The broadcasting node is the user launching the stream and managing the physical recording.
  • Transcoder: There are hundreds of users who act as transcoding nodes. These users run the LPMS program on their computers and are tasked with the vital functions of transcoding the stream and providing the network with bandwidth and storage.
  • Relayer: These nodes serve as the middleman that passes the video from Transcoder to Consumer.
  • Consumer: This is the end-user who is either consuming the stream or distributing the stream further (such as an application that streams live sports games for consumers).

Illustration of the Livepeer network (Source: Livepeer Github)

  • Livepeer Token & Economics
The Livepeer network is not a free product. Users who set up nodes expect payment for the computational power and bandwidth they are providing. Payment is fairly simple, the Broadcaster pays the Livepeer Network in Ethereum (ETH), and each node receives a portion of this fee proportional to the bandwidth and processing power they provided.

Livepeer does have its own coin, the LPT coin; however, the LPT coin is not used for payment and is instead used for operational purposes. In order for transcoders to earn the right to work on the network, they must first stake LPT coins. The more LPT coins they stake, the more work they can perform on the network, and the more fees they can subsequently earn.

Additionally, the Livepeer network has a built-in reward system that provides the transcoders who do more work with free LPT coins. This essentially creates a feedback loop where the more LPT each transcoder stakes, the more work they can do, and the more LPT they will receive as a reward. The transcoder can then stake their LPT reward and earn themselves even more work. This system successfully rewards the most active and high-performing contributors within the Livepeer network. Because LPT coins have monetary value and can be sold and exchanged for other cryptos, the Livepeer reward system also serves as an additional form of revenue, as transcoders can choose whether to stake the LPT they receive or sell it on the open market. Having this additional stream of revenue provides transcoders incentive to lower the Ethereum-fee they charge to broadcasters, as this creates more demand and work for their transcoding services.
  • Delegators
A unique aspect of Livepeer’s staking system is the usage of delegators. Delegators are LPT token holders who do not run their own nodes but instead stake their LPT with other transcoders within the network. When delegators stake their LPT with a transcoder, the transcoder’s total pool of LPT increases and they are able to earn more work. In return, the delegators receive a small portion of the fees the transcoder earns.

Delegators can choose which transcoder to stake their LPT with, and naturally, they will be inclined to stake their LPT with the transcoders who are the most active and earn the most fees. Thus, the delegators essentially serve as an informal voting and review system, with the active and successful transcoders receiving more staking from delegators than the bad transcoders.

Who Is Behind Livepeer?
Livepeer was co-founded by Doug Petkanics (CEO), Eric Tang (CTO) and Yondon Fu (Director of Engineering).

Doug Petkancis graduated from the University of Pennsylvania with a degree in computer science. Before Livepeer, Doug worked with Groupon, Accenture, Wildcard, and Hyperbulic. Wildcard and Hyperbulic were both entrepreneurial ventures that Doug Petkancis co-founded with fellow Livepeer founder Eric Tang. Eric Tang graduated from Carnegie Mellon with a degree in computer science before later working with Next Jump, Clickable, and Groupon. Lastly, Yondon Fu graduated from Dartmouth with a degree in computer science. Prior to co-founding Livepeer, Yondon worked for Betterment, Sighten, and Tag.

Livepeer has raised over $50 million across its series A & B rounds and is backed by investors such as Tiger Global Management, Northzone, Notation Capital, Coinbase Ventures, CoinFund, and more.

What Is The Future of Livepeer?
Livepeer is primed for future success. They have discovered a genuine issue and pain point within the streaming industry and have provided a viable product and solution. Livepeer is positioned to serve as the primary transcoding and streaming infrastructure for all blockchain projects hoping to integrate video into their applications – essentially becoming the AWS of Web 3.0. The market they operate in is incredibly large and Livepeer has seen continually growing usage rates since its inception.

The biggest factor that will influence Livepeer’s success is competition. With a market that is large and lucrative, new projects are likely going to develop in hopes of taking advantage of the available profits; however, currently, Livepeer is operating relatively unchallenged. Although many blockchain and crypto companies are operating within the video streaming industry, there are few other major players within the infrastructure side of streaming.

Conclusion
Livepeer is a decentralized video streaming infrastructure project focusing on transcoding and distribution. Livepeer hopes to innovate upon the traditional streaming industry to create a faster, cheaper, decentralized, and more scalable form of streaming. Those looking for a decentralized Web 3.0 project, should undoubtedly give Livepeer heavy consideration.















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