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By dispersing transcoding labor throughout its network, Livepeer hopes to substantially lower the price of hosting streaming video in apps.
When Grayscale, the company behind the GBTC investment vehicle, announced in March 2021 that it was launching additional trusts based on other cryptocurrencies, the majority of the newly announced trusts were well-known, predictable cryptos like Chainlink and Filecoin. However, one new component seems to have caught even crypto experts off guard: Livepeer.
Livepeer is a decentralized Ethereum-based solution that seeks to dramatically reduce the price of video streaming apps. It accomplishes this by allocating resource-intensive transcoding jobs to users who give their computer’s processing power to the network. There are incentives for network players, such as “orchestrators” who encode video and delegators who stake LPT tokens to assure liquidity, as with most decentralized services.
Grayscale definitely sees potential in the concept, but what exactly is it all about? Here’s an overview of how Livepeer works, how people may become involved, and how to purchase the LPT token.
Livepeer is a decentralized service that aims to reduce infrastructure costs for streaming and on-demand video applications.
It is neither a consumer-facing video platform in and of itself, nor is it a decentralized replacement to Twitch or YouTube. Instead, it’s a back-end solution for app developers that distributes the effort of transcoding video—or changing it from one format to another before playback—across participating computers on the network.
According to the company, it can reduce resource costs by up to 50 times when compared to typical, centralized techniques to video transcoding.
How does Livepeer work?
Livepeer relies on “orchesstrators,” or users who have connected their computers to the network, to fulfill transcoding requests from app developers as needed. These folks offer their computational resources—CPU and GPU power, as well as bandwidth—for Bitcoin payments. These users are also referred to as “video miners” by Livepeer, in keeping with the mining terminology used for block generation activity on many other blockchain platforms (like Bitcoin).
Developers that utilize Livepeer’s network to power their video applications are required to pay LPT for transcoding and distribution services. Additionally, LPT holders can stake their tokens towards an orchestrator to become a delegator, receiving a lesser percentage of fees and prizes for participating in the network without actively involving themselves in the transcoding process.
Did you know that?
According to CoinGecko, the price of Livepeer’s LPT token increased about 450 percent in the days after the launch of the Grayscale Livepeer Trust in March 2021.
What’s so special about Livepeer?
App developers face high costs when it comes to video streaming. It is one of the hidden expenses that customers may not see or understand, but which might be passed on to them in the form of service fees, increased advertising, or having their data sold.
Livepeer may allow new types of video-driven products and business models by lowering those expenses using distributed computing. People may contribute their processing power on the other end of the equation and earn fees and prizes in the process.
What can you do with Livepeer?
Because Livepeer is not a consumer-facing service, individuals who watch videos transcoded over the Livepeer network may be unaware that the service was involved.
Livepeer provides a potentially cheaper alternative to centralized services for app developers, reducing processing expenses to include video capability inside their services. There is also an incentive for network members to connect their computers to the network and/or stake LPT tokens to assist assure liquidity.
Did you know that?
As of March 2021, Livepeer has begun a “co-mining” test partnership with decentralized storage platform Filecoin, enabling users to mine and receive rewards on both platforms.
How to buy LPT
LPT is not yet accessible for purchase in fiat money, and as of this writing, exchanges such as Coinbase, Binance, Gemini, and Kraken do not enable trading. However, it is available on other cryptocurrency exchanges such as the decentralized exchange (DEX) Radar Relay.
You can use fiat to buy cryptocurrencies like ETH or BTC from an exchange like Coinbase, then transfer the money to an external wallet before using them to buy LPT from another exchange. Other exchanges that accept LPT include Uniswap and Balancer.
The Grayscale Livepeer Trust
Grayscale’s cryptocurrency-based trusts are exchange-traded investment vehicles meant to offer traditional investors with exposure to cryptocurrencies. Each trust’s price approximately reflects the price of the corresponding cryptocurrency, and Grayscale retains a considerable quantity of each coin or token within the trust. By investing in a trust, investors do not own any actual cryptocurrency, but they may benefit from its rising value.
By establishing the Grayscale Livepeer Trust, the company is betting on the future of the LPT token: that its value will rise over time and that investors would want to get exposure to it. Grayscale holds $8.5 million in LPT as of March 2021, but if the success and expansion of its Bitcoin Trust is any indicator, the corporation might acquire much bigger sums over time.
The capacity of Livepeer to scale to meet demand will most likely determine its success. If its distributed network can deliver comparable service quality to centralized alternatives at a fraction of the cost, it might become a trustworthy choice as Web3 apps and platforms gain popularity. It is still a rather tiny network, with only 47 transcoders linked as of March 2021. In the same month, Livepeer CTO Eric Tang tweeted that the service has transcoded more than 1.6 million minutes of video in the previous 30 days.
However, Livepeer is not the only service aiming to alleviate the high costs of video streaming through decentralization. Theta is the most well-known of the services, but it takes a unique approach by employing surplus user bandwidth to help provide broadcasts to other users, compensating you with Theta Tokens in return for your bandwidth. VideoCoin, which bills itself as a “AirbnB for video,” takes a similar strategy to Livepeer in that it spreads processing jobs across network nodes. Golem is a more generic decentralized computing power-sharing network that supports audiovisual demands (such as rendering).
Livepeer aspires to be entirely decentralized in the future, although it is now led by the legal company Livepeer Inc., which developed the network. A 2017 roadmap, which the official Livepeer website FAQ now refers to as “slightly outdated,” provides a high-level view of how the network may someday develop and progressively remove its centralized aspects.
As the Web3 industry expands and matures, decentralized infrastructure services may prove to be quite lucrative. Grayscale believes that Livepeer will be one of the services that transforms the streaming video business, and this vote of confidence may help it stand out from the crowd and attract more app developers who want to connect into its decentralized network.
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