As an orchestrator/transcoder that is currently only doing CPU transcoding, I wanted to share my thoughts regarding yesterdays discussion in the community call.
Maybe a short recap: The LPT inflation is currently decreasing at a rate of 0.03 percentage points per round and will reach 0 in less than 7 months if nothing is changed. By then, an orchestrator’s revenue is solely dependent on the ETH rewards from its transcoding jobs.
One opinion is that this will be good for the network since it weeds out the orchestrators that don’t provide proper transcoding (which is what livepeer is all about in the end). One of those transcoders would be me at the moment
I would love to help the network and provide some GPU transcoding, but as someone that doesn’t already have a mining rig, it just makes zero sense economically. I’m living in a flat, so setting up a few GPUs is currently not an option due to heat/noise. Colocation would be an option but for that to pay itself, the ETH rewards would need to be quite substantial first.
IMO, livepeer needs more supported devices, e.g. Intel QuickSync or AMDs Ryzen with integrated Vega GPU - that would at least give people like me the option to set up a small mini PC for some light transcoding while the ETH fees grow and a bigger investment becomes reasonable.
But what I would really love to see is support for devices like the nvidia Jetson Nano - a low cost, low power, passive cooled device that is capable to do 4k transcoding! This is something that almost everybody can afford and run and would allow Livepeer to grow a truly decentralized transcoding network all around the world. I for one would be happy to run a few of those (I do have a reliable 1 Gbit/sec up- & download connection).
Now let’s assume we have 0 inflation in 7 months but only a little bit of fees are generated. For many orchestrators it would not be worth it to invest in a transcoding setup. So most of the bonded LPT (also I would expect a large sell-off…) would end up with a few orchestrators that already have the setup (maybe because they’re also mining).
And once a good amount of ETH fees are generated, I see a chicken/egg problem: A new transcoder (that joins the network in maybe one or two years) does not get enough work because he does not have enough stake (because nobody will bond to him because he does not generate enough ETH fees…). So essentially he’s forced to “work” with an orchestrator that already receives transcoding jobs (and that can dictate the terms)?
Only a low number of supported devices, 0 LPT inflation and low LPT liquidity would increase this “centralization” of orchestrators.
So my opinion is to keep a healthy amount of LPT inflation until enough ETH fees are generated. In the short term, this might keep some “lazy” orchestrators running that don’t care about transcoding at all, but in the long term Livepeer would end up with a more decentralized set of orchestrators.