Before getting into the details of the Livepeer token, it is worth mentioning that the service provided by the network — video broadcasting — is priced and paid in Ethereum. In fact, in the future it could be priced and paid in any token, including the Dai Stablecoin or any token that a user on the network is willing to accept. The Livepeer Token (LPT) on the other hand, is used by the keepers of the network — the nodes who do work in order to make the network run securely and efficiently.
The main use of LPT is to stake it in order to have the right to do work on the network. Staking means depositing some token into a smart contract (also called “bonding”), which is locked up for a period of time before it can be withdrawn. This serves as a security deposit which can be penalized or taken away if the user does not act honestly. The work that users who stake have the right to do comes in two forms:
Users who stake can opt to run transcoding nodes on the network. These nodes contribute significant hardware (CPU + GPU) and bandwidth, and can charge broadcasters for the service of transcoding their live videos into all the formats and bitrates requested, and then serving them to the network.
Users who do not wish to run their own transcoding nodes can instead delegate their stake towards other candidate transcoders. These users are providing the service of vetting and QA’ing all the transcode candidates to choose honest, high performing, cost effective ones.
Users who do work on the network will earn inflationary LPT that the protocol mints each round. They will also earn fees that are charged to broadcaster in ETH. For more details on the relationship between fees, inflationary token, delegates, and transcoders, see the details in the Livepeer Whitepaper.