50% delegation threshold

Hi there!

I just got off the Water Cooler Chat with Titan-Node and other orchestrators, who suggested I open a forum thread about this.
My issue is with the 50% threshold for inflation tick. So what I’ve been thinking is 50% is an arbitrary number, right? (Just as 2% inflation target of Fed is) So what I’d suggest is, why doesn’t the protocol (the code - not through voting because voting would still make it hard-coded whereas it should be dynamic) consider changing that number depending on market conditions? Livepeer Explorer says there are lower minutes demanded for Livepeer service now (Although Titan-node says that’s not accurate). Even if demand is stable, say, 60 orchestrators could also readily do what 100 can do. Why don’t we lower 50% to say 25 (another arbitrary number for the purpose of giving an example. This number would actually depend on the current demand) thus lowering Lpt inflation. People (orchestrators) objected this, as lower LPT inflationary rewards (as well as Eth rewards) won’t be enough to sustain the operating costs. Well then, so be it, right? O’s in lower ranks are not getting enough work, anyway. Why are we, as a network, trying to subsidize orchestrators that are not getting enough work as it is, when it’s a bear market, anyway? Look guys, I know orchestrators are the real deal here. They’re the ones that are doing the actual work, and we are grateful. But the network doesn’t need so many of them and definitely doesn’t to compensate them when there is not even enough work, anyway. When conditions improve, hundreds of them will line up anyway. If some of them had to shut down now, then so be it. We don’t need to be stuck with so much inflation in a bear market.
Thanks

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I think one important point which seems to be glossed over is that LPT rewards are designed to subsidize Orchestrator operations. Orchestrators don’t just transcode video, they currently form the core community of Livepeer providing support, answering questions, unboarding new entrants, developing tools, building their own stacks on the Livepeer network, etc.
This is a huge time commitment which often comes from the smaller Orchestrator nodes more often than not.
LPT rewards play a huge role in keeping especially those people interested to stay involved in Livepeer. Besides, entities that do not want to get diluted by LPT inflation merely have to stake their tokens to get around it, as all minted tokens are distributed according by stake

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Yeah, the thing is if you don’t exist, somebody else will show up (no disrespect). You guys seem to think you own the network. You don’t. There is a free market for you too. 20 orchestrators would still make the service work with no missing frame. There is not enough transcoding demand right now, the network doesn’t need to pay lpt’s to so many orchestrators.
(It’s like even if thousands of miners decided to go away, bitcoin would still produce blocks.)

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If you are afraid about inflation, you can easily stake and neutralize it. If ppl are afraid about inflation, they can stake and remove all these lpts from the exchanges and lower supply and drive price up. I can see you are only worried about your token price without diving deeper into protocol design. Once inflation grows, ppl will start loosing more by not staking, eventually trend will change again. What caused this drop in total lpt stake is exchanges and other institutions. Also if you don’t exist, somebody else will buy the token and stake it or not (no offence).

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You guys are missing the psychology of things here. In a bear market, when belief into web3/defi is at its lowest, people just don’t. They don’t stake, they don’t delegate. Token price gets lower (also) because of inflation, which hurts the overall vibe and PR of the project. Decentralization is about adoption first. And when your token drops to the 3rd page of Coinmarketcap ranking, dapps would start hesitating to work with you as well. Bear market/Bull market inflation threshold should be dynamic, not static. It should be a function of demand. That’s all I’m saying.

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You seem to be ignoring the points I made about the other roles Orchestrators fullfill within the Livepeer community. Without the Orchestrators` involvement the community falls apart. Who do you think big investors contact first when they are researching the network before they buy up a bunch of LPT to stake? Who is going to help new broadcasters integrate their stack? Who is there to guide new node operators or delegators ? Who has been testing and debugging node software, submitting pull requests and otherwises provide valuable feedback to the Livepeer inc team?
The services the Orchestrator community provides as a whole is more than just transcoding media (that’s the Transcoders job) and it’s vital for the growth of the network. Running the risk of losing any of that knowledge and experience in building on or working with Livepeer should be avoided

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I do not think that higher price of the token determine quality of the project. In fact it is the other way around. Once real demand for the services grows, there will be more eth to be cut by delegators, thus ppl will see that cheap lpt delegated to some low stake can give them great returns, then price of the lpt will grow also. Same like with dividend companies stocks. Market will adjust. Artificial price manipulation does worse PR than organic growth. Most of the ppl who stake do not care about swings in the price contrary to traders who are afraid to stake cause of 7days lock period. They think they can make more of the price speculation. It hurts when the token price is low and stable and you see that inflation rewards would increases your loss even more, so you think it would be a great idea to remove it.

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I know and I’ve said this before that Orchestrators are the bread and butter of this network. It’s just that I sometimes feel like I’m just a peasent working for the Orchestrator lords. 100 people are running this show and earning money. Anyway, that aside, I still think a dynamically changed inflation threshold would be healthier. The network doesn’t need (to subsidize) 100 O’s when there is low demand. That’s all I will say about this. Gn.

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How is network subsidizing orchestrators? Delegators can choose plenty of orchs with 0 reward cut yet they choose these with higher reward due to eth fees shared with them…

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Even if you don’t do any work, you still get Lpt rewards. Binance is running a blank O that does no work but still getting rewards.

In a sense what I’m saying is, when there is low demand, instead of inflating our token to keep a constant 100 O’s alive, maybe we should let some of them go.

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LPT inflationary rewards are there to bootstrap the network while the network is not sustainable due to it’s low demand. Once transcoding demand on the network picks up, the main income source for delegators and orchestrators shift from LPT to ETH fees. That would be the moment to reduce the threshold or vote to eliminate LPT inflation alltogether

The coin price is irrelevant for adoption of the project. Integration, documentation and good support is what drives that. Picarto.tv, the biggest user of the network is a web2 company who doesn’t give 2 cents about what we do or the coin price. They’re just here for the cheap transcoding

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“LPT inflationary rewards are there to bootstrap the network while the network is not sustainable due to its low demand.”
The network is always sustainable, my friend. Even if there is very little work, that work can still get done with far fewer orchestrators and it’ll be okay and flawless. What lpt inflation is doing is sustaining the O’s, not sustaining the network. So, the question is and I repeat, “why exactly does the network sustain orchaestrators that are not doing that much work in a bear market, anyway”?
Do you think you might be biased just a bit?
“When there is low demand, instead of inflating our token to keep a constant 100 O’s alive, maybe we should let some of them go.”

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Do you guys ever realize it’s all orchestrators, everywhere? Discord, Forum, Water Cooler Chat… I only see O’s talking. I’m not one and I think I’m the only one. Why? Why are there no delegators or no people with other roles anwhere? Just orchestrators. And the network? Oh, it has to sustain you. Because you made gpu investment. You have operating costs. Well guess what? That investment is no use in a low demand world. The network shouldn’t need to compensate O’s that has no work. I don’t care if you don’t win Ethers these days, just shut down temporarily. Otherwise this is like an upper class minority ruling over a majority.

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Wow, a lot to digest here.

From a high level, I see your point in the first post, it’s pretty ruthless, but I see it and maybe there’s something to explore there.

Looking at your replies in this thread though, you come across as disrespectful and dismissive and I don’t think that’s the right way to go about this conversation.

Yeah, the thing is if you don’t exist, somebody else will show up (no disrespect)

Putting “no disrespect” in parentheses doesn’t make what you said respectful and I think you’re incredibly out of touch with the network. Orchestrators do come and go frequently, and the cost to set one up is very expensive right now. Most orchestrators are operating in the red or are simply unable to scale because they don’t have enough stake to survive off LPT rewards. What you’re saying here is the top Orchestrators, the ones who have been here the longest, contribute the most, and actually care about the network should be cut loose because “somebody else will show up”. Weird take but ok, moving on…

You guys seem to think you own the network. You don’t.

Strange, I don’t know any Orchestrator who thinks that. I know a lot of really passionate node operators who want to see Livepeer win, but no one that believes they “own” the network.

You guys are missing the psychology of things here.

Another disrespectful jab demeaning Orchestrators, nice.

Decentralization is about adoption first.

Correct, and how do you expect a decentralized network to attract adoption if the infrastructure (cough cough, that’s us O’s) is garbage? Do you not think the demand side is top-of-mind for all the active Orchestrators?

It’s just that I sometimes feel like I’m just a peasent working for the Orchestrator lords.

I’m sorry you feel that way and I’m not sure why you do, to be honest. The Orchestrator community is some of the kindest and most giving people I’ve met. Sort of an odd thing to throw in there.

100 people are running this show and earning money.

What makes you say this? It’s simply not true. Most O’s don’t make money or can’t afford to improve their performance, as I mentioned before.

Some O’s have come together to build a solution for that, and that’s what the active O’s do - build. You seem to think we sit on thrones and drink ever-flowing Thai ice-tea while asking our delegators to bring us more cheese platters. No, we’re in the mud going to work.

Anyway, that aside

Really strong statements to follow with “anyway”.

Binance is running a blank O that does no work but still getting rewards.

Yes, we all agree, vampire O’s should not exist. We don’t like them either.

The network is always sustainable, my friend.

Would love to know how a network is always sustainable without any infrastructure or developers.

Do you guys ever realize it’s all orchestrators, everywhere? Discord, Forum, Water Cooler Chat… I only see O’s talking.

Yes, that’s kind of the point we’re trying to make. Orchestrators are the most active builders on the network outside of the core team. We would LOVE to see more active delegators and broadcasters, and the O community continues to work on attracting different profiles to the ecosystem.

The network shouldn’t need to compensate O’s that has no work.

The network shouldn’t need to compensate poor performers or O’s that don’t have any transcoders. Again, we agree there. Orchestrators that do have GPUs and enough stake will receive their share of work and should be compensated. Orchestrators that have GPUs but little stake are not compensated very well and plenty of them do shutdown or leave the network permanently.

Otherwise this is like an upper class minority ruling over a majority.

I don’t understand your fixation with lords and ruling. It’s a baseless statement, and frankly, pretty rude. Who are O’s ruling? What majority?

I don’t think your points around inflation are invalid and I’m not dismissing them at all. I think permanent inflation is unhealthy, but I also think many of the comments you made were entirely uncalled for and needed to be addressed.

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I’m sorry if I offended you. Thank you for taking the time to answer. Except you didn’t offer any solutions. Please just tell me this: Do you think it would be better overall or not for the network to dynamically change the threshold instead of putting an arbitrarily chosen static number (50%)?
When you dynamically change the threshold and lpt rewards are even lower when there is low demand, even more O’s would be sidelined and say, 20 will remain. What we are left with is that available transcoding work is still done but with less inflation, isn’t that correct? Network still transcodes all available jobs and lpt is not necessarily inflated. When demand increases again, the code increases the threshold, so inflation is increased to accomodate more orchestrators because there is now more transcoding work to do. Wouldn’t you agree?

P.s. I’m again sorry if I came across disrespectful Ben. That was definitely not my intention.

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One of the things you’re missing about the dynamic inflation rate that is currently in place is that it not only incentivizes orchestrators and soon video builders, it also encourages LPT holders to stake their tokens essentially locking them up so they aren’t sitting liquid and easily dumped on the market.

20 orchestrators would still make the service work with no missing frame

Do you have any data to back up this claim? Reducing the number of orchestrators in itself has no effect on inflation, the tokens will just be spread among fewer orchestrators.

You guys are missing the psychology of things here.

How do you think the optics of Livepeer announcing they cut 80% of their capacity would be received by the market?

It’s just that I sometimes feel like I’m just a peasent working for the Orchestrator lords.

I don’t understand this perspective. Orchestrators pay for infrastructure to run the network and share their earnings with delegators.

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Do you think it would be better overall or not for the network to dynamically change the threshold instead of putting an arbitrarily chosen static number (50%)?

I don’t necessarily think it’s a bad idea, but how drastic would it be? If demand is low, would you like to see 0 LPT generated? Also, there is a whole other side of this discussion when it comes to monitoring demand, which was brought up in the WC as you mentioned. To have a dynamic inflation rate, you’d really need to know what profiles are being transcoded. It’s a lot to track and I’m not sure what the logistics are behind that.

Keep in mind most O’s have already soft-agreed to give up a % of their daily rewards when Livepeer Delta goes live.

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If demand is 0, yes, I believe no inflationary lpt should be generated. The current situation would still give out inflationary lpt, even if there was 0 demand.

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What I meant was that when there is lower demand, instead of distributing, say, 1000 lpts to 100 orchestrators, it should generate 500 lpts for 50 orchestrators. Because the amount of work was lower, it was already carried out by 50 O’s, not 100, and no need for higher than needed lpts to be generated

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So if we follow your logic and reduce LPT inflation when there is little work, what do we do when Livepeer attracts the attention of a major platform and gets tons of demand? Do we increase inflation then? What’s the point of that?

LPT inflation should be reduced in the long term, but it was made a part of the protocol for a reason. There was inflation when the network first came online and guess how much demand there was back then? The entire point is to make it attractive for orchestrators and delegators to stick around for a while.
It’s the reason why the transcoding is so cheap and delegators who are participating in the network by staking it don’t even get diluted. Besides the amount of O’s we would be losing by cutting their rewards, how many Delegators would dump their tokens if they can get more return by staking ETH and run less risk that way?
Last month total fees earned were 12 ETH, shared for all Orchestrators and Delegators. That’s peanuts!

It’s the Delegators taking home the biggest piece of the pie, not the Orchestrators who only take a small cut (some even taking 0%). If we decide right now that Orchestrators get 0% of LPT inflation this would make a negligible difference to inflation. If we slash inflation across the board meaning Delegators also make no money now, they will be scrambling to dump their tokens and I would say this has an even worse effect on LPT price than having the inflation in this early, experimental stage of the network

And the network? Oh, it has to sustain you. Because you made gpu investment. You have operating costs. Well guess what? That investment is no use in a low demand world.

The investment in GPU’s and maintenance costs are actually low. 1070Ti’s are cheap and transcoding barely uses any power. The costs of running localy are covered easily. Some Orchestrators provide a high quality, load balanced, global transcoding service which actually does cost a lot to maintain. Those setups are vital to keep within the network cause (especially risk averse web2) companies have strict requirements on speed, quality and uptime.

And as you said before the orchestrators are everywhere. Me and a whole lot of other Orchestrators are dedicating our time to the network. I rarely see crypto projects (especially small cap like LPT) where there is such a dedicated community behind it involved with the network supporting it.
None of us are making bank off of this except for the few Orchestrators who managed to attract whale stake over the years. Attracting stake like that and keeping it takes a lot of time and effort which is another reason we want Orchestrators to stick around, learn and build on Livepeer. Our work is closer to community service in the hope of Livepeer gaining traction in the future.

You also keep fixating on the point that fewer Orchestrators can do the transcoding just fine, but no-one comes in here asking for just transcoding. That is just one small part of powering a modern media pipeline and does not sell in and of itself (you can ask any Livepeer Inc employee about their journey to find a product-market fit). That’s what we, the Orchestrator community and the Livepeer Inc team are all working together on

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