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Livepeer Remained Resilient In Q3 Despite Bear Market – Report

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Livepeer, a decentralised video processing protocol which challenges big Web2 platforms including Amazon and Google, remained strong despite the prevailing bear market. It managed to transcode 37 million minutes of video and to grow their revenue, a new report by Messari revealed.

On revenue in the demand-side which comes from transcoding services and are paid to node operators in ETH and further distributed to transcoders and delegators, income rose by 7 percent to $91,000, representing an all-time-high in ETH of 52 percent compared to previous quarter.

While the video transcoding market is still relatively small, transcoding revenue has grown proportionally with usage and transcoding fees. Livepeer is well-positioned in a market with significant upside potential, the report which covered the third quarter of 2023, said.

Of the 26.4 million LPT that is supplied, about 13.8 million LPT was staked by 100 node operators and up to 4,300 delegators. While Livepeer network participation rate stayed at 50 percent since the fourth quarter of 2021, it gradually increased to 52 percent throughout the third quarter of 2023. The report noted that participation rate began picking up, for the first time, following the migration to Arbitum in February of 2022, although it fell by 46 percent in May before making a rebound.

Revenue from staking increased in LPT terms by 17 percent to over 650,000 LPT in the period under review but revenue reduced by 46 percent to $4.8 million when projected in United States Dollar, a significant fall when compared to the figure from the last quarter of 2021 which was $16.9 million.

“It’s also a testimony of the resilience of the Livepeer network, given the current overall market downturn… The steady increase in staking participation shows a continued commitment to the Livepeer network as participants serve increased demand of video transcoding services from end users,” the report stated and suggested that node operators should have larger stakes on the Livepeer network to increase their chances of receiving more transcoding work.

In governance, Livepeer token holders voted to restructure the Livepeer round time to avoid being affected by Ethereum’s round time following the recent merge which resulted in the original recent Ethereum mainnet merging with a separate proof-of-stake blockchain called the Beacon Chain, now existing as one chain with a proof-of-stake validation and reducing Ethereum’s energy consumption by 99.95 percent.

After The Merge, block time reduced by approximately 10% to a fixed 12 seconds. Because LPT inflationary issuance occurs per round, a ~10% decrease in round time would result in a ~10% increase in LPT reward distribution frequency, the report said and added that “In response, LPT token holders voted to adjust the Livepeer round time metric from 5,760 to 6,377 blocks.”

Livepeer will be exploring innovations in its line of business. Although it is yet to fully incorporate features such as scene classification and object recognition from private beta to its main network it is experimenting with rendering images. Currently, it is building a tool to help with video ingestion from end users and play back the transcoded result from the Livepeer network, a tool which will be useful for decentralised YouTube-like projects. In quarter three, Livepeer released Catalyst for broadcasters to connect to the transcoding network to serve video to node operators and receive transcoded results. As it develops features and tools, Livepeer distributed $250,000 to six projects operated by the community.

According to its roadmap, the future for Livepeer is in using blockchains to improve how video contents are served and consumed. It is exploring on-chain integrations of livestreams and video snippets. Using the verifiable video streams approach, it will introduce the verifiability of both the content and ownership of videos.

Videos can be tied directly to end users and content-addressed streams can be verified based on unique hashes without needing to download a video in its entirety, the report said.

The creators of the report expect Livepeer to continue to grow, leveraging on the breakout of Web3 apps out of prototype stage, just as it remained strong during the bear market. However, they advised that Livepeer should accrue more revenue from transcoding services instead of rewards to ensure a resilient ecosystem. It also needs to continue its efforts towards a more uniform staking distribution and a larger base of node operators should demand significantly pick up.


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