The Livepeer treasury is nearing its 750K LPT cap, currently at 685K LPT with ~2K LPT accruing daily. In about 30 days, it will hit the limit, causing treasury contributions to drop to 0% until a governance proposal reinstates them.
Pros to Raising the Cap
Continue Treasury Growth: Capture more value while inflation is high.
Avoid Governance Delays: Replenishing later requires another proposal.
Sustained Network Support: Node incentives are currently strong, making continued treasury funding beneficial at this time.
Cons To Raising The Cap
Unstaked LPT: The amount of LPT accruing within the treasury remains unstaked.
No Treasury Diversification: There is no active management of the treasury.
Not Enough Proposals: Until we increase the number of proposals, we should not raise the cap.
Next Steps
Kickstart a discussion in the forum - Should we raise the cap now? If so, to what level? How do we balance growth with active deployment? Please share your thoughts as a comment to this post below.
Review discussion by Friday 21st
Discuss on Water Cooler Monday 24th or at an earlier date if it seems like there is enough support.
I question the necessity of increasing the treasury budget. I believe that if we cannot effectively utilize our existing treasury funds, then acquiring more would be unproductive. I would prefer to see these funds allocated to contribute to the network, and I suspect others share this view.
Just don’t. This whole treasury needs to be restructured, at the moment it is not a very well thought mechanism. Pure waste. x posting from inflation thread:
On a related note, the treasury itself needs restructuring. I recommend looking at how Cow DAO manages theirs: Karpatkey Cow DAO Report. Their approach is diversified—they provide liquidity to pools, participate in passive income protocols like Aave, and allocate a portion of their revenue to the treasury. The rest is used for buybacks of their native token, strengthening its price and redistributing revenue to holders.
Right now, the treasury is losing significant potential income by sitting idle. For example, 700K LPT could easily be converted into $14M invested in MakerDAO at a 12.5% yield, generating enough revenue to cover at least three additional developer salaries. It would also help solve liquidity issues on DEXes. The opportunity cost is simply too high to ignore.
To maximize the treasury’s potential, Livepeer should adopt the following strategies:
Active Treasury Management – Partnering with an experienced treasury management team, similar to Cow DAO’s collaboration with Karpatkey, would enable better asset diversification, yield generation, and risk management.
Liquidity Provision – Allocating a portion of the treasury to provide liquidity on decentralized exchanges (DEXs) would enhance token accessibility, stabilize markets, and generate revenue through trading fees.
Revenue Generation – Investing idle funds in stable, yield-generating protocols (e.g., lending platforms or liquidity pools) could create passive income streams to fund development and operations.
Risk Management – Implementing a structured risk management framework with clear asset allocation strategies, diversification measures, and ongoing investment monitoring is crucial to mitigate potential losses.
By adopting these approaches, Livepeer can transform its treasury into a sustainable, revenue-generating asset—ensuring long-term stability and growth while reducing reliance on inflationary rewards.
In about 30 days, it will hit the limit, causing treasury contributions to drop to 0% until a governance proposal reinstates them.
But looking through the smart contract sure enough:
if (treasuryBalanceCeiling > 0) {
uint256 treasuryBalance = livepeerToken().balanceOf(treasury());
if (treasuryBalance >= treasuryBalanceCeiling && nextRoundTreasuryRewardCutRate > 0) {
// halt treasury contributions until the cut rate param is updated again
_setTreasuryRewardCutRate(0);
}
}
I don’t think we should increase the cap - there’s no point in accruing funds if there’s no destination for them and there’s so much value locked in there already.
I would rather see an update to this logic: what is the rationale for setting the entire nextRoundTreasuryRewardCutRate to 0 once the cap is reached?
Why not update the setCurrentRoundTotalActiveStake function to set the treasuryRewardCutRate to 0for that round only for as long as the cap is reached? This way it would continue accruing if treasury funds get used later on, without requiring a governance proposal to reset the nextRoundTreasuryRewardCutRate.
TL;DR: let’s focus on investing over the next month into community initiatives while we have momentum. Then let’s focus for Q2/Q3 on more effective governance and more innovative treasury management.
Longer version:
Personally, I agree that the cap should not be raised. I think as a community, we should focus over the next 30 days to put the treasury to use and be proactive with it.
To @Pon and @stronk’s point:
I think we should see this moment as an opportunity. We have some strong SPE proposals in the pipeline. In the next 30 days, the community can focus on passing a number of core SPEs to invest back into the ecosystem. This will put a stake in the ground to kick off a number of experiments:
Inference Credits for AI Agent SPE to kickstart demand on the network via Eliza and other OS agent projects.
OS Video Software Funding SPE to support key (AI) video infra projects & core repos.
GovWorks SPE to streamline proposal processes and inspire the community for new SPEs.
Liquidity SPE to ensure liquidity remains stable across DEXs and CEXs
Protocol Security SPE to decentralise the security council and professionalise protocol development.
Dev Rel SPE to fund the creation and distribution of creative and educational content around Livepeer’s AI capabilities.
Video Transcoding SPE to improve the development of transcoding capabilities on the network, alongside AI capabilities.
AI Livestreaming SPE to showcase Livepeer’s realtime video AI capabilities through a practical use case.
We have got some great momentum! Now is the time to focus our energy to getting a number of these over the line. You can reaad the details below here: SPE Dashboard.
To @Karolak’s point:
I think there is a case for actively managing a portion of the onchain treasury (for instance 25-50%). If this portion can be staked or swapped to accrue a stable yield (e.g. DAI or USDC), it would certainly be useful for a rainy day in the future. Though doing this via a custodial solution is quite a centralised option. The key question would then be: what are the proposed steps to implement a more active management?
(This being said, I think this conversation is perhaps for another post).
What custodial solution are you talking about? They use all decentralized yield projects, like sky protocol, aave, liquidity pools. They maintain safe multisig with core team. Nothing can be done without core team approval and CIP vote of all token holders. What If LPT sinks, will you raise inflation% cut? Then it will inflate and drop even more. The quicker you realize having LPT printed as a treasury without any organic inflow the better. Sky protocol gives 8.5% it is more than current revenue from transcoding! If you release those 750k now price will sink and then you will end up with inflationary spiral problem.
You can not print LPT and hope to maintain its value without any real revenue stream into the treasury. 750k LPT * $8 * 8.75-12.5% = $500-750k YEARLY.
That would cover most of current SPE spendings.* The goal should be to make treasury self sutainable maybe then it would not be that easy to spend those $. We would get rid of LPT price fluctuation problems and current model could be terminated.
LPT price is taken for granted where in fact we only rely on GRAYSCALE. Once they pull out their fund we are going to 0.
I think this proposal is very tied to the inflation discussion that Doug raised. This is because the treasury fills up with 10% of the LPT issuance every Round. Inflation increase has also increased the rate of LPT to the Treasury. If inflation slows down, Treasury replenishment will follow suit. Both discussions should be considered interconnected and even the proposal could be merged together for the sake of simplicity if a consensus is reached.
Totally agree with @honestly_rich, this is a call to promote more active builder participation that can contribute to the growth of the ecosystem at the same pace that the Treasury accrues LPT.
