Livepeer Research Report
Research summary:
This research report is focused on Livepeer which is an upcoming project operating in the video streaming industry. We will focus on how the project works, what problems it solves, and review its pros and cons.
The CMP is $27.85 as of 10th June 2021.
What is livepeer?
Livepeer is a protocol that is based on the Ethereum network. It provides a cheap and cost-efficient transcoding solution to video streaming platforms.
Transcoding is the process of converting a raw video file and reformatting it for different devices and different quality.
It is currently #112 (based on Mcap) in the cryptocurrency market. Livepeer’s native token is inflationary and currently has 23,732,784.45 tokens in circulation. It is currently listed on Binance, OKex, and Gate.io.
What Problems does it aim to solve?
The video streaming industry is huge. It has players such as Youtube, Twitch, Zoom, Google meet, and more. But the industry faces a challenge that is not quite visible to the consumers.
‘Video transcoding’ is the said challenge and acts as a huge barrier for new entrants in the video streaming industry. As mentioned above, Transcoding is the process of converting a raw video file and reformatting it for different devices and different quality. This process is conducted to make sure that the video is available for everyone.
How does it do that? By reformatting the raw video for different devices, people will able to view Videos made on a desktop, on mobile. If the video was made on a 4k based camera, a person with 2g speed would wait for hours to watch the video (due to buffering). With the help of transcoding, different quality versions become available, making the viewing experience much better for the person with 2g speed especially on platforms like YouTube which have different video quality options.
The process of transcoding is extremely expensive and requires heavy computational power. According to Livepeer, this process costs around $3 per stream per hour to a cloud service such as Amazon, up to $4500 per month for one media server.
To cover costs, video streaming platforms often show ads on their videos or sell data.
What does livepeer aim to do?
Livepeer aims to bring down the cost of video transcoding and remove it as a barrier for new entrants. It does this with the help of 2 components.
• Orchestrators: These are users who run software that allows them to contribute their computational power for transcoding. There is a need for technical expertise to become an orchestrator and can also be a full-time job, as you get paid in ether or a stablecoin.
• Delegators: Delegators are Livepeer token holders who participate in the network by staking their tokens towards orchestrators who they believe are doing good and honest work. You can think about staking like putting a deposit down. When you stake, your tokens are locked up for a limited period. The delegator is incentivized by earning a portion of the fees the orchestrators earn. It currently has 2,724 delegators and this number is growing everyday.
Livepeer is not consumer-facing but rather a behind-the-scenes infrastructure solution. It is used by 2 types of people and is responsible for paying fees to the orchestrators and delegators.
• Developers: Developers are the people who build applications that include live or on-demand video can use Livepeer to power their video functionality.
• Broadcasters: Broadcasters are platforms like Twitch who have large audiences and high streaming bills or infrastructure costs that can use Livepeer to reduce costs or infrastructure overheads.
What is the utility of the coin?
The native token “LPT” is an ERC-20 token. It is primarily used by orchestrators and delegators. They need to stake LPT to perform the work of transcoding and distributing video on the network. The more LPT they own, the more work you’re able to perform on the network in exchange for fees. As the network’s usage grows, so does the demand for orchestrators and thus LPT.
If an orchestrator does not do a good job in terms of transcoding or they act maliciously, their staked LPT will be taken away from them.
Currently, 12.8 Million out of 23.7 million LPT are staked (54% of the current circulating supply.) The native tokenomics is inflationary (Inflation rate = 0.01805%) and mints LPTs every 17.63 hours.
Industry and competition analysis.
The global video streaming market size was valued at USD 50.11 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 21.0% from 2021 to 2028 due to the widespread adoption of the internet along with smartphones across the globe.
Based on Livepeer’s value proposition Video streaming giants such as Youtube, Netflix, Twitch, and more are likely to reduce their expenditures and will allow smaller players to enter the industry which in turn will bring innovation in the ever-growing space.
Theta is the main competitor of Livepeer in the cryptocurrency space. Theta is something that livepeer strives to become.
| Project | Mcap (In USD) |
|---|---|
| Theta network | 8,97,03,38,800 |
| Livepeer | 65,97,46,014 |
Based on the mcap comparison, livepeer has the potential to go 12.5 from the current price.
Team, Media, and community strength.
Livepeer is currently governed by a for-profit company called “Livepeer Inc”. They are the same people who developed and released the protocol. They have mentioned in their roadmap that they will eventually be governed by the community.
Although the founders don’t come from a Video streaming background, they are entrepreneurs and have launched multiple startups, out of which 1 got acquired by Groupon.
Their media presence and community strength have tremendous scope for growth, with over 12,800 Twitter followers, 5,151 discord members, and 2,383 telegram followers.
Conclusion
Pros:
1) Livepeer is adding value by solving one of the biggest problems faced by the video streaming industry, which is responsible for 80% of the Internet’s bandwidth. So, it’s safe to say that there is great potential for Livepeer.
2) Livepeer has the glowing approval of Grayscale. They have a Livepeer trust which has over $12.2 million.
3) It has a focus on decentralization compared to its peers.
Cons:
1) The tokenomics is currently inflationary (There are plans to change this in the future) and mints new tokens every 17.63 hours
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