Thread by @MTorygreen

@Livepeer is one of the hidden gems of the #metaverse 💎

It’s an essential piece of a multi-trillion market, but 99% of people don’t know how it works or why it’s important

Below I’ll explain in terms a 5-year-old can understand

(and why demand for $LPT may skyrocket)

👇

🧵

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Livepeer is a decentralized marketplace for video transcoding

(I’ll explain what this means in a second)

It's powered by the $LPT token which trades at $4.52 (for a FDV of $122M)

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This thread will explain:

• What is video transcoding

• Why current methods for transcoding are inadequate

• How #LPT solves that problem

• How it works

• The #tokenomics of $LPT

• Why demand for the $LPT token may skyrocket in the next bull market

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🔶 What is Video Transcoding?

Video is the lifeblood of the internet

It represents over 80% of total internet traffic today, and this figure will likely increase as platforms such as YouTube, TikTok and Twitch continue to gain prominence

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Video transcoding is a key step in delivering video to the consumer

It’s the process of reformatting video files so that they can play on a variety of devices such as PC, mobile, etc…

In short, companies need to transcode their videos if they want people to see them

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🔶 Problem

Unfortunately, transcoding can be extremely expensive –

It can cost $3 per stream per hour, up to $4,500 per month for a server and up to $1,500 per month for a CDN

All in, a growing video startup can often find themselves with a streaming bill in the millions!

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Because most transcoding is done through centralized cloud providers such as AWS, Google or Microsoft, broadcasters must also contend with:

• High competition for cloud resources

• Unreliable delivery

• Potential for censorship

None of these are acceptable for #Web3

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🔶 Solution

$LPT solves this problem with a decentralized marketplace for transcoding services

It is significantly cheaper, more scalable and more resilient than traditional cloud providers

In the spirit of #Web3, it’s also nearly impossible to shut down or censor

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🔶 Protocol Overview

The network is comprised of over 70K independent GPUs that have processed over 186 million minutes of video

That’s enough to encode all the real-time video streaming on Twitch, Facebook and YouTube combined!

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Potential uses for #Livepeer include:

• Pay-As-You-Go Content Consumption (e.g. live sporting events, online courses, entertainment)

• Auto-scaling social video services

• Uncensorable Live Journalism

• Video Enabled DApps

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🔶 How it Works

The $LPT marketplace is composed of three key stakeholders:

• Broadcasters

• Orchestrators

• Delegators

Let’s take a look at each

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🔹 Broadcasters

Broadcasters are the customers

Anyone who wants to stream video (from TikTok to a small video startup) can access the Livepeer network to purchase transcoding services

Broadcasters make payments to Orchestrators in ETH

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🔹 Orchestrators

Orchestrators are the “workhorses” of the network

They are the nodes responsible for doing the actual transcoding

To ensure high quality work, orchestrators are required to stake $LPT as collateral (which is taken away if they don’t deliver)

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🔹 Delegators

Delegators are non-technical users who lend $LPT tokens to Orchestrators in exchange for a percentage of the rewards

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🔶 Market Opportunity

The global market for video streaming is massive

According to Precedence Research, it is expected to grow at an 18% CAGR to $1.7 trillion in 2030

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🔶 Competition

Transcoding services are a key enabling technology for this market, and they are currently dominated by the “Big 3” cloud providers:

• Amazon AWS

• Google Cloud

• Microsoft Azure

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🔶 Competitive Advantage

#LPT 's service is superior to traditional cloud providers in several ways. It is:

• Cheaper

• More scalable

• More reliable

• Censorship resistant

Let’s explore each of these advantages

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🔹 Cheaper

Livepeer’s distributed transcoding service are orders of magnitude cheaper than traditional cloud providers

In fact, the network believes that, at scale, using Livepeer will be 50x cheaper than AWS!

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🔹 More Scalable

By relying on a global network of computers, $LPT can aggregate more transcoding power than any single entity could on its own

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🔹 More Reliable

Multiple nodes make the network redundant, greatly reducing the risk of service interruptions from outages

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🔹 Censorship Resistant

As a decentralized network, it’s almost impossible to censor nodes on #Livepeer

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🔶 Traction

The protocol has achieved significant traction since launch

It has transcoded over 186 million minutes of video to date and has been growing at 23% per quarter

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🔶 Team

Livepeer was founded in 2017 by @petkanics, @ericxtang and @YondonFu

It lists 46 employees on LinkedIn including @ShaykaraWebster, @f1l1b0x, @iameli, @AdamSoffer and @victorge73s

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🔶 Investors

Notable investors include @DCGco, Tiger Global, @multicoincap, @PanteraCapital, , @notationcapital and Alan Howard

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🔶 Tokenomics

$LPT is the native token of the Livepeer network

It has a circulating supply of 26.9M

Below we will cover $LPT’s:

• Usage

• Initial distribution

• Emissions schedule

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🔹 Token Usage

$LPT is a utility token with three main use cases:

• Rewards: Orchestrators are rewarded with $LPT

• Collateral: Orchestrators stake $LPT as collateral

• Governance: The $LPT token can be used for governance

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🔹 Initial Distribution

10 million $LPT were released at launch with the following distribution:

• 63% to the public

• 19% to early investors

• 12% to the founding team

• 5% for the Livepeer Grant Program

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🔹 Emissions Schedule

$LPT is an inflationary token

The supply adjusts based on the level of participation in the network (if > 50% is staked, inflation decreases to 0, if < 50% is staked, it increases)

Below is a estimation from @messari on the token’s long-term supply

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🔶 Big Picture

Video transcoding services such as Livepeer will play an extremely important role in the development of the metaverse

While they currently power formats such as 4K and UHD, they will likely also be needed for VR and AR content

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#LPT 's decentralized network of 70K GPUs may also have numerous uses beyond video transcoding

Not only are GPUs the primary tool for AI (ML and DL), but they are also used in rendering, gaming, IOT, zero knowledge proofs, and a variety of industrial applications

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This represents a massive opportunity for $LPT as many of these use cases have potential values in the tens of trillions! (e.g. AI alone is expected to be worth $80T)

A successful entrance into any one of these spaces could increase $LPTs value by orders of magnitude

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In short, $LPT is establishing a beachhead as a key technology provider in the large and growing video streaming market

It’s also building a strong network for the future, and could become one of the key infrastructure providers of the $10T to $30T #metaverse

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If you want to learn more about $LPT, I suggest following:

@AdamSoffer
@danipass0s
@daveambrose
@ericxtang
@Livepeer
@LivepeerGov
@LivepeerOrg
@livepeerstudio
@livepeertv
@manabubannai
@monaverse
@petkanics
@SuhailKakar
@twobitidiot

Please tag anyone I missed!

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Note: This is obviously not financial or investment advice nor a recommendation to purchase LPT

It’s just a few thoughts on how things could potentially play out

Like with any forecast, it’s a guess at best, and just as many things could go wrong and drive the price to $0

I hope you've found this thread helpful.

Follow me @MTorygreen for more fundamental analysis on Web3 protocols.

Like/Retweet the first tweet below if you can:

https://twitter.com/MTorygreen/status/1613943980470964224