Author: Lisa, LD Capital
1. Project Introduction
Livepeer is a decentralized video streaming network built on Ethereum. It is a scalable platform as a service that provides a solution for the real-time media layer in decentralized development stacks, targeting developers who want to add real-time or on-demand video to their projects. Livepeer can improve the reliability of centralized broadcasting service video streams while reducing associated costs by up to 50 times. Currently, video streaming consumes 80% of all internet bandwidth, and companies distributing videos on the internet need to transcode the videos (transcoding refers to the process of obtaining the original video file and reformatting it to ensure the best viewing experience regardless of using 2G or 5G bandwidth or different devices), which Livepeer can greatly reduce the cost of. The following example illustrates how Livepeer works.
Alice is an application developer who is using Livepeer to add real-time video functionality to her high school sports event live streaming app. Bob is the event coordinator responsible for live streaming his high school basketball game using Alice’s app. When Bob opens the application and starts recording, the application sends the real-time video and live streaming fees to the Livepeer network, while Livepeer transcodes the video into a format that can be received by the audience.
There are two main roles in the Livepeer network to ensure the quality of live streaming: Orchestrators and Delegators. Anyone can join the network and become an “Orchestrator” by running the software, which allows them to contribute their computer resources (CPU, GPU, and bandwidth) for transcoding and distributing videos and earn fees. To have the right to perform such work on the network, one must own Livepeer tokens, namely LPT. The purpose of Livepeer tokens is to coordinate, guide, and incentivize participants to ensure that the Livepeer network is as cheap, efficient, secure, reliable, and useful as possible. Delegators are Livepeer token holders who participate in the network by “staking” their tokens to Orchestrators. When broadcasters pay fees to the network, both Orchestrators and Delegators receive a portion of these fees as a reward for ensuring a high-quality and secure network.
2. Token Economic Model
The LPT token is in a fully circulating state, with a market value of $219 million, ranking 143rd.
In Livepeer, new tokens are minted and allocated to Delegators and Orchestrators in each round. Here, a round refers to a unit measured in Ethereum blocks, where one round equals 5,760 Ethereum blocks. The average block time in Ethereum is 14 seconds, which means a round lasts approximately 22.4 hours. The current inflation rate for LPT is 0.03165%, and the current total supply is 28,904,976.38 Livepeer tokens. In the next round, a total of 9,264.04 tokens will be rewarded to all participants.
The newly minted Livepeer tokens have a value of approximately $70,000. The annual inflation rate, based on the current inflation rate, is approximately 12%.
The Livepeer inflation rate will automatically adjust based on the staking rate, which is currently 44.72%. Livepeer refers to this as the “participation rate.” Livepeer assumes a target ratio of 50% between network security and token liquidity, and if the participation rate falls below this level, the inflation rate will increase by 0.00005% per round. If the participation rate exceeds this level, the inflation rate will decrease by 0.00005% per round.
III. Financing Information
LPT is one of the currencies held by Grayscale’s fund. As of September 1st, the Grayscale fund holds $4.108 million worth of LPT, ranking 10th among the 14 currencies.
IV. Price Performance
LPT was launched in 2018, with the highest price occurring in November 2021. The current price has dropped by 92.3% from the highest price.
The recent market trend started on August 7th this year, with LPT rising from $4.98 to $5.87 in a single day, a 43% increase. On August 13th, it reached a high of $9.26, doubling in a week. At 9:30 am today, it rose 12% in 15 minutes and is currently near the previous high without a breakthrough. Although the price attempted to test the $8 mark again, the amount of LPT held in contracts is relatively low compared to the start of this market trend, and there has been no significant increase in the amount of contracts along with the price rise. Currently, the funding rate has dropped to below -1%, and the number of long and short positions and the long-to-short ratio of large accounts have decreased to 0.81 and 0.72, respectively.
On the same day the market trend started, large-scale transfers were observed on the blockchain, and the frequency of on-chain transfers in August was significantly higher than in the previous period.
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