LPT Overview

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Executive Summary

The Livepeer Token (LPT) is the protocol-layer asset that secures, governs, and economically regulates the Livepeer network. It is not a payment token for video consumption, nor a representation of corporate equity. Its function is strictly structural: it converts bonded capital into measurable economic weight that secures job allocation, enables governance, and funds ecosystem development. LPT operates exclusively at the protocol layer (on-chain) on Arbitrum One.

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1. Formal Definition

Let the Livepeer Protocol be defined as an on-chain coordination system for allocating work and rewards across decentralized compute providers. LPT is defined as:

A stake-weighted coordination asset that provides economic security, governance authority, and treasury control within the Livepeer Protocol.

Its functional domains are:

1. Staking security
2. Inflation-based reward distribution
3. Delegated capital allocation
4. Governance voting
5. Treasury stewardship

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2. Architectural Context

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2.1 Protocol Layer (On-Chain)

LPT interacts with core smart contracts:

• BondingManager — stake accounting
• Minter — inflation issuance
• RoundsManager — epoch-based reward timing
• Governor — proposal and voting execution
• Treasury — governance-controlled funds

All protocol authority derives from bonded LPT balances.

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2.2 Network Layer (Off-Chain)

The network layer includes:

• Orchestrator software
• GPU compute execution
• Transcoding and inference pipelines
• Gateway APIs and routing

LPT does not execute work. It economically secures actors who perform work.

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3. Staking and Economic Weight

Let:

• (B_i) = bonded stake of participant (i)
• (B_T) = total bonded stake

Economic weight: [ W_i = \frac ] Work allocation and inflation rewards are proportional to (W_i). This creates a capital-backed Sybil resistance model.

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4. Inflation Mechanism Overview

Per round (t): [ R_t = S_t \times r_t ] Where:

• (S_t) = token supply at round (t)
• (r_t) = protocol-defined inflation rate

Inflation adjusts dynamically based on bonding rate relative to target bonding rate (see Tokenomics section for full derivation).

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5. Delegation Model

Delegators bond stake to orchestrators, increasing their economic weight without running infrastructure. Total orchestrator stake: [ B_O = B_ + \sum_D b_ ] Delegation enables capital efficiency and competitive operator markets.

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6. Governance Authority

Voting power derives from bonded stake: [ V_i = \frac ] Governance may modify:

• Inflation parameters
• Contract implementations
• Treasury allocations

Governance authority is capital-weighted and on-chain enforced.

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7. Security Model

Protocol security is proportional to total bonded stake: [ \text \propto B_T ] An attacker must acquire a threshold fraction of bonded LPT to influence work allocation or governance.

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8. Economic Tradeoffs

These tradeoffs are explicit design decisions.

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9. System Interaction Diagram

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10. Operational Considerations

Participants must understand:

• Bonding and unbonding delays
• Commission structures
• Inflation parameter adjustments
• Governance quorum thresholds

Participation exposes capital to protocol-level risk.

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References

• Livepeer Protocol Repository
• Contract Registry
• Livepeer Improvement Proposals (LIPs)