If you think this article is not for you, maybe you should first check out my previous post “Maybe you already have Livepeer Tokens (LPT)? Find out here!”.
Introduction
This article explains some of the principles being used to help decentralize and democratize the Livepeer project, using token engineering, smart contracts and game theory.
You can maybe think of it as some kind of open-source live video infrastructure DAO… but even that might be too general.
If you are a holder of Livepeer Tokens (LPT) this article will also help you to understand some of the opportunities available to you to participate, and the associated benefits.
So, what do I need to know?
At Livepeer, we are experimenting with a concept called Delegated-Proof-of-Stake (DPoS) as a mechanism to support the development of Livepeer protocol for livestreaming video.
Delegated-Proof-of-Stake (which is an evolution of Proof-of-Work) is where participants in the protocol can benefit by aligning their incentives with other participants in the protocol, and working together towards a common goal - in Livepeer’s case, a stable open-source decentralised video infrastructure network.
Specifically, it involves an owner of a stake in the network (the Token Holder), delegating their owner’s responsibility to another participant (the Delegate) who is better-suited to actively grow the network. In the case of Livepeer, the Delegate is a person / persons who operate Livepeer open-source software for Transcoding, which reformats a video from one format into another, to make sure that video can be viewed by anyone anywhere in the world.
The more delegated stake a Delegate can prove that they have, the more they will be rewarded for their participation - so it’s in their interest to attract more stake.
But what’s the point?
One way to look at this, is that the project’s success boils down to whether you care about living in a world with a free and open media, powered by an open-source video infrastructure. An infrastructure powering broadcasts across borders, oceans and deserts, with Blockchain-level security, privacy, availability, transparency and censorship-resistance. And yes, we also talk a lot about scaling in our project too.
The system is built by combining Ethereum decentralized smart contract platform, with ffmpeg’s complete, cross-platform solution to record, convert and stream audio and video.
> This combination allows anyone in the world to operate powerful video-processing software, without restriction, without permission, on behalf of someone else, and get paid for it instantly.
All of this has the potential to create a new paradigm for sharing live video, governed and owned by the community. You can maybe think of it as some kind of open-source live video infrastructure DAO… but even that might be too general.
Some background
When Livepeer launched to Ethereum’s mainnet in April, we gave away around 63% of the value in the project to the Ethereum community as a statement of our intent to decentralise the control of the destiny of this project to the widest possible open community.
Specifically, anybody who had
> 0.1 ETHat block5,265,264(mid-March 2018) will own a share of Livepeer.
This was approximately 2.6 million addresses, each of which will soon have received a share via the cunning MerkleMine process. This is an innovative mechanism to incentivise the community to distribute tokens to those eligible to receive them. You can @dob’s article Introducing the MerkleMine if you’d like to find out more.
If you are reading this, then this probably includes you
The chances are, that if you’re reading this article, then you hold the private keys to at least one account which had > 0.1 ETH in mid-March 2018.
If so, then congratulations! you are the proud new owner of a share of Livepeer.
This share will come in the form of Livepeer Tokens (LPT) and is best viewed in Livepeer’s Protocol Explorer.
What does all this mean for me?
Your share in Livepeer could represent many things to you:
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You can see it as owning a piece of the future internet infrastructure economy, and hodl on to it in case it becomes worth something one day.
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You can see it as an opportunity to help govern a future of this open, free and transparent system for sharing, educating, communicating, raising awareness, connecting, live and in real time.
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You can see it as a call-to-action to bring your skills to tackling some of the technical challenges we’re facing in the community, as we build from the core outward.
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You can sell your LPT for a bit of Ether on Radar Relay to someone who values it more than you do.
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You can decide that you don’t care, and send your share to someone who will appreciate it (if you care enough to pay the gas).
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You can disregard it as a shitcoin which strangely appeared in your wallet.
Before you decide, there’s something you might like to know
Every day, the number of Livepeer Tokens (LPT) is increasing. These new tokens are being made to reward the early participants in the network, the Transcoding Nodes, for operating the software which runs this decentralised network.
So what?
This means that every day, the total number of Livepeer Tokens (LPT) increases.
This has the unfortunate effect (for you) that the value of your new asset is being very slightly eroded (as a proportion of the total value of the network). It’s kinda like how inflation works in a traditional economy.
Wait. No. It’s exactly how inflation works.
Figure 1: illustration of how new LPT being created reduces the value of the LPT that you own, as a % of the overall number of LPT
But isn’t inflation a bad thing?
In some ways yes, and in some ways no. Like most things.
It is typically viewed as a negative thing when people are unable to generate value from their assets, HODLing on to them, and not putting them to good use for the world. In hyper-inflationary cases, asset owners can be diluted out to next-to-nothing.
But in this case, we believe that the inflation is an entirely positive thing, creating an incentive for owners of the network to participate, to opt-in, to say yes to a more open way of doing video on the internet.
So, how can I participate?
You can participate in Livepeer’s Protocol by delegating your stake to one (or more) of the Transcoding Nodes in Livepeer network.
These Transcoding Nodes are the computers that process video being transmitted around the network. For example, they might transcode some livestreaming video in Ultra-High-Definition into something lower quality and requiring much less data. This means that users with weaker internet bandwidth and with less powerful devices can still watch live. Perhaps in Africa somewhere.
Fundamentally, they are working to make a more stable and robust network for broadcasting video - so, by supporting them, you are also supporting the network to move towards its goals.
Transcoding Nodes will be paid Fees, in Ether, by Broadcasters, for the work they do (which helps them to pay their operating costs), and also receive a share of the new Livepeer Tokens being created every day (remember, the Inflationary Rewards?).
And what are the benefits to me?
You gain, the node operator gains, and the whole eco-system gains. It’s a win-win-win!
If you bond to a node, you will help them to receive more Inflationary Rewards from the network.
Also, a node that you bond to will share some of their income with you. This means that your holding of LPT (and ETH) will also grow, as the total number of LPT grows, thus limiting your downsides of the inflation.
Usually, these computers are operated by humans (or groups of humans). It’s important to remember that bit, because aside from all this crypto-madness, this is all still about getting humans working together to make something remarkable happen.
So, by bonding to one of these nodes, you will be:
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showing your support for a human (or group of humans) building and operating this decentralised network.
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helping these humans gain a greater reward for their participation
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helping to provide an improved level of service to the end users of the network
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AND you’ll be gaining financially as well!
This all sounds great, where do I sign?
To get started, you can view the list of Transcoders in Livepeer’s Protocol Explorer, and the option to BOND to any of them. The bonding dApp will guide you through the instructions for how to delegate your stake, and you will need to have some kind of Web3.0 enabled browser or plugin.
And if you are having difficulty deciding who to bond to, you can check out a list of humans (and teams of humans) operating Transcoders nodes in Livepeer’s network elsewhere in the forum.
I don’t have any LPT!
The distribution is still ongoing at time of writing this post. And it’s likely that if you’re reading this far, then you’re probably eligible.
So check out my previous post “Maybe you already have Livepeer Tokens (LPT)? Find out here!” for more information on receiving your share.
And if you still find that you don’t have a share, but you would like to bond, then check out another recent post “How you can get Livepeer Tokens (LPT)”
Livepeer Community
We are always looking for ways to build community around Livepeer, and with so many new token holders, we welcome all participants into Livepeer’s Community.
Given the stage the project is at, we are especially interested in developers who are building applications or dApps which use live video. This could include applications / dApps relating to education, entertainment, content sharing, journalism, TV, Radio, social networking, and public transparency, where having a low-cost censor-resistant live video service would improve the overall offering.
So if you know someone, please send them our way (and maybe give them your LPT!).
Footnotes
Thanks to @angyangie, Livepeer’s newest Core Team member, for her edits and feedback, and to @dob for help with terminology.