So for the last weeks, I’ve been thinking out loud and exchanging ideas on Twitter and Discord on whether crypto can actually claim some of the features of Bitcoin. I felt like I couldn’t convey what I think clearly enough so I wanted to open a blog post and get it out of my system once and for all in a hopefully more clear and organised way.
I’d like to focus on 3 features and make a case comparing Livepeer to Bitcoin
Decentralized: Now for crypto too (Livepeer), being a distributed system is one for the ages, right? Distributing the workload and sharing the resulting revenue. Instead of 1 central company doing all the work and making all the money. This is as important as the invention of the Internet imo and this feature of crypto is the one that should be emphasized and taught on every platform rather than the other 2. Because I think that crypto is decentralized too like Bitcoin, but it’s not permissionless or trustless, unlike Bitcoin, which I will delve into below.
Permissionless/Immutable: Bitcoin has no address. Satoshi is nowhere to be found. It’s not even known who they are. China bans mining. Nothing. Miners move elsewhere. Some of them even shut down their facilities. Nothing happens. Bitcoin difficulty is adjusted and there are at least 3 miners and at least 2 them are well meaning, meaning the majority continues producing good blocks. And if any central authorithy wants put a stop to that, or reverse a transaction… Well, too bad!
Now for Livepeer though and I’ve given this example scenario on Discord as well: Let’s say a video that is not wanted by the government is being transcoded using the Livepeer protocol and broadcasted live on a dapp outside of US. Since the dapp can’t be shutdown, the government sends a cease letter to the only available address they know: Livepeer Inc. Livepeer Inc. replies saying they don’t have the power to stop the protocol (nor that it wants to). But… The news get out, right? Lpt price drops to 1 cent. (Would it or would it not? I’m pretty sure it would) Orchestrators shut down because it’s not profitable to transcode anymore. The video stops getting transcoded. True, the protocol itself wasn’t stopped. But the news of US government sending a letter is enough. In the end the government got what it wanted. How? Physcology of people. Even if the protocol itself wasn’t stopped, you need to have lpt above a certain price. (Somebody on Discord said, “Hypothetically they could also outright announce a ban on the token with the same result. But then you could always fork the system.” Yeah but then again, would the new token be priced high enough to let the orchestrators break even to continue operation after that? I don’t think so.)
In the above scenario things broke (or stopped) not because anything became wrong with the protocol, nor that the government was able to directly intervene. It happened because token price got hurt. Why? Because of people. Physcology. Sociology. Not mathematics. In the end though, the question is: Is Livepeer truely permissionless or not?
Enough adoption must be achieved for any crypto project to claim Permissonless. Like Bitcoin level adoption…
Trustless: Bitcoin is trustless, we all know that. The blocks don’t need a 3rd party to be produced. Transactions happen without an approval from 1 central entity. Also to be able hold my Bitcoin, I don’t really need anyone either. I dont have to trust a bank. Now, here is the thing: By trustless you should also understand that there mustn’t be a single person or a group of people that if they disappeared/died in a plane crash/decided to leave and retire, the system must be able to continue operation. Now, just as an example if Michael Saylor died suddenly, would anything happen to Bitcoin? Let’s say, after him, the board of directors of Microstrategy happened to decide to sell the 150k Bitcoins they hold. Would anything happen to Bitcoin? No. Its price would drop to 3k$ and then will be picked up. The important thing is the blocks would still be produced. Nothing would happen regarding transactions. Now, what happens if Livepeer’s founders decide to retire? Or what happens if a plane carrying the entire core team and the founders crash on the way to a web3 gathering to London? Lpt price drops to 1 cent and again, like the scenario in the second bullet point, orchestrators shut down. Videos stop getting transcoded.
Now is crypto really trustless or not?
My point is, I often hear permissionless or trustless in talks about web3. But crypto in its current adoption level is neither permissionless nor trustless as I pointed out above. But decentralized, it is. And this is what really matters. Decentralization is going to make the world a much more efficient place. It’ll let resources be shared more fairly. But as long as people in crypto continue emphasizing that rebellion stuff (which it isn’t), the core and main feature, the most important aspect of crypto (decentralized) is being overshadowed. That’s what I think.
Coming from a web2 background the decentralized aspect is what attracted me too, and totally agree that there is a certain overzealous in the web3 space which might be hampering wider adoption
I think Livepeer Inc does a good job there by taking a hybrid approach, where certain parts of the stack are still centralized while the web3 space is still too technically immature to really compete on price, performance, features or required maintenance/devops work
(on the other hand I do not agree that there was significant work put into verifiable video or video NFT’s, as those hours could’ve been spent into improving the protocol)
However, I do think the permissionless and trustless aspects are important to consider. Otherwise, why even make use of the blockchain? Decentralization is much easier to achieve without all the constraints that come with crypto’s
Why would we need probalistic micropayments if the O and B could each simply keep their own private ledger of outstanding balances?
Why would we do stake-weighted selection if the B could take a more optimal approach by tracking performance statistics per Orchestrator?
Your point that decentralization is the key aspect is valid, but LPT is more than an incentive for community contributions and cheap transcoding. It has to offer something besides free money for network participants
At the moment Broadcasters and (most) Orchestrators are good actors, but imagine a future where the network is mature and there are plenty of other Broadcasters that come and go. Capabilities of nodes can also evolve (dCDN anyone?)
A bad Broadcaster could refuse to pay and move to a new address as Orchestrators pick up on this and stop accepting work from them
A bad Orchestrator could simply say they did the work but return the source material or modify the source to their own benefit.
This is when the other aspects come into play: a Broadcaster is guaranteed to pay for transcoding and stake slashing to punish bad actors is a power which cannot be given to a single entity.
The protocol needs a method to ‘optimise itself’ in that sense, which is less about rebellion and more about having a method to reach consensus keep the network secure and performant.
I understand “trustless” is used mostly in that sense that any bad actor will get slashed without any central authority having to enforce it but I think “trustless” feature is more general. In my mind, it’s closely related to how decentralized a system is too.
Noone or no group must be too important to lose. I shouldn’t need to trust anyone taking care of their health or not. People that hold their coins on Binance are taking a huge risk also because they don’t know what will happen if CZ suddenly dies. Well guess what? I worry about Doug and Eric and even Titan-Node recently :)) Now this is not trustless anymore imo. I need to trust people that I’ve never met in my life. My tokens are staked, everything is well but if something happened to Doug and Eric lpt would most certainly become so cheap that orchestrators would shut down and leave. Things would vanish so painfully quickly. Trustless has this angle to look at too.
Sounds more like a problem with having only one Broadcaster (Livepeer Inc) on the network which puts in the majority of time and money and thus holds so much power and influence. Something which is slightly mitigated with stuff like Delta (where grants no longer have to go through LP Inc) and in the future by having other entities leverage and build on the LP protocol
Also I disagree that the entire ecosystem would collapse without Dough or Eric. Yeah they’re extremely important, but LP Inc is a big organization and in that case someone else will step up. If LP Inc would dissappear at this stage then yes that would be game over for the protocol. But this is purely a matter of adoption and a risk you take for investing/participating at such an early stage
I am flattered you think I am important
But I am not even apart of the core team, I’m just an Orch that runs Water Cooler Chats.
I think I brought this up before but comparing BTC to LPT is not really comparing apples to apples. LPT doesn’t even have a consensus mechanism. For that we use ETH as our base protocol for decentralization and consensus. Comparing BRC-20 tokens to LPT would be more accurate and at the consensus layer it would be more fair to compare BTC to ETH.
LPT is a work token as described in the MultiCoin Capital blog and has a totally different structure of what makes a work token valuable. Work tokens are largely valuable for their off-chain work.
Revenue generated by buyers of the work is what gives LPT it’s value, not consensus.
What does it matter if the price drops to 1 cent? Yes maybe some Orchs stop transcoding (or hopefully just the Orchs that are not transcoding leave since they only earn from inflation) but rewards from ETH pay for my transcoders so they are still profiting. I think we would still have plenty of capacity on the network if the price dropped to near zero.
And if we had more Broadcasters, they likely don’t hold LPT so price doesn’t affect them.
But yes if Livepeer Inc were to fail then the community would have to quickly come together to offer support for Livepeer Inc former customers to keep them on the network.
Overall I understand your concern, we are still very early in this world of “crypto”. Even though the word crypto itself stands for cryptography which gives no clarity on what our ecosystem even stands for. HTTPS uses crypto technology, does that make it a crypto project?
I would be hesitant to keep comparing Bitcoin (which is the most unique invention known to man) to a project that doesn’t even have a native consensus mechanism and that is trying to achieve something completely different, to become “The World’s Open Video Infrastructure”
Two different problems, two different solutions, two different paths to achieving them.
Just my 2 cents.