LD Capital: Livepeer (LPT) Short-term Fund Analysis *Premium
Original 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 solution for developers who want to add real-time or on-demand video to their projects. Livepeer provides a solution for the real-time media layer in decentralized development stacks. It improves the reliability of centralized broadcasting services and reduces associated costs by up to 50 times. Currently, video streaming consumes 80% of all internet bandwidth. Companies distributing videos on the internet need to transcode the videos to ensure optimal viewing experience on different devices and bandwidths. Livepeer greatly reduces the cost of this process. Let's take a look at how Livepeer works with an example.
Alice is an application developer who is using Livepeer to add real-time video functionality to her high school sports live streaming app. Bob, as the event coordinator, uses Alice's app to livestream his high school basketball game. When Bob opens the application and starts recording, the app sends the real-time video and the streaming fee to the Livepeer network. At the same time, Livepeer transcodes the video into a format that can be received by the audience.
In the Livepeer network, there are two main roles to ensure the quality of live streaming, Orchestrators and Delegators. Anyone can join the network and become an "Orchestrator" by running software that allows them to contribute their computer resources (CPU, GPU, and bandwidth) for transcoding and distributing videos, in return for earning fees. To have the right to perform such work on the network, one must possess Livepeer tokens, known as LPT tokens. The purpose of Livepeer tokens is to coordinate, guide, and incentivize participants to ensure that the Livepeer network is as affordable, efficient, secure, reliable, and useful as possible.
Delegators are the holders of Livepeer tokens, and they 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 Economy Model
The LPT token is in a fully circulating state with a market capitalization of $219 million, ranking 143rd.
In Livepeer, new tokens are minted and distributed to delegators and orchestrators in each round. Here, a round refers to a unit measured in Ethereum blocks, with one round equal to 5760 Ethereum blocks. The average block time in Ethereum is 14 seconds, which means a round lasts approximately 22.4 hours. The current inflation rate of LPT is 0.03165%, with a total supply of 28,904,976.38 Livepeer tokens. The next round will award a total of 9,264.04 new minted Livepeer tokens to all participants.
The corresponding value of these tokens is approximately $70,000. The annualized inflation rate based on the current inflation rate is approximately 12%.
The inflation rate in Livepeer automatically adjusts based on the participation rate, which is currently 44.72%. Livepeer considers 50% to be the target ratio that strikes a healthy balance between network security and token liquidity. When the participation rate falls below this level, the inflation rate will increase by 0.00005% per round. Conversely, when the participation rate exceeds this level, the inflation rate will decrease by 0.00005% per round.
Three, Financing Information
LPT is also one of the coins held by grayscale funds. As of September 1st, the grayscale holds $4.108 million worth of LPT, ranking 10th among 14 coins.
4. Price Performance
LPT went online in 2018, with the highest price occurring in November 2021. The current price has dropped by 92.3% from the highest price.
The recent wave of market trends started on August 7th this year, with LPT rising from 4.98 to 5.87 in a single day, an increase of 43%. On August 13th, it reached a high of 9.26, doubling in a week. This morning at 9:30, it rose by 12% in 15 minutes, but it has not yet broken through the previous high. Although the price is attempting to challenge the $8 mark again, the open interest of LPT contracts is relatively low since the start of this market trend, and there has not been a significant increase in open interest accompanying the price rise. The funding rate has now dropped below -1%, and the long/short ratio and the ratio of large account long/short positions have fallen to 0.81 and 0.72, respectively.
On the same day as the market started, there were large transfers on the chain, and the frequency of on-chain transfers in the entire month of August was significantly higher than the previous period.
