VideoCoin Analysis
- Overview
- Background
- Technology
- Architecture
- Token Distribution
- Management
VideoCoin provides content creators and consumers with an algorithmic marketplace for encoding, storing, and distributing video files.
The VideoCoin network aims to reduce the costs and increase the utilized capacity of the cloud video infrastructure market by providing an algorithmic market place that supports just in time demand for video.
With over 30% of all data centers underutilized, VideoCoin hopes to increase network efficiency by offering VideoCoin on a new blockchain with a native protocol token (VID), wherein miners earn VideoCoins by providing video infrastructure services and clients spend VideoCoins to rent these services.
Project Background
VideoCoin is creating a decentralized algorithmic marketplace for encoding, storing, and distributing video across networks. Video currently takes up a tremendous amount of internet traffic and by 2021 is expected to comprise over 82% of all internet traffic. While video is taking up an even greater amount of compute resources, computing technology has failed to keep pace. Most notable are the costs associated with encoding and storing video. Expensive hardware and large amounts of disk space are required for material dense video, such as 4k, to stream properly. VideoCoin hopes to implement new processes to video infrastructure that not only improve cost efficiency but increase the quality and speed of video streaming.
VideoCoin aims to improve the three main components of cloud video infrastructure: encoding, storing and distributing, by using a decentralized ledger where all processes are recorded and verified for authenticity. The process works by incentivizing miners to rent out compute resources, storage and bandwidth for consumers needing that service. While all three components of content delivery are verified through proof of work, a complimentary proof of stake blockchain will work in the background to confirm those three mining proofs. VideoCoin $VID will act as the incentive and financial tool that enables this system to operate in the desired manner.
Technology
VideoCoin operates on its own blockchain with a native token VideoCoin (VID) acting as the monetary base supporting each transaction. The network is designed so that cohorts of miners work synchronously to verify VideoCoin transactions as well as compete to rent out cpu/gpu cycles, disc space, and bandwidth. Miners in the VideoCoin network can run processes on data center servers, household computers, and even mobile devices. The process is broken down into three different marketplaces for transcoding, storing, and distributing video, all with corresponding proofs of work. These three proofs are then confirmed by the verifier pool which is run using a DPOS blockchain.
Encoding video is the first step of the video delivery process. During the encoding process, compute resources are used to create video bitstreams from input data that match requirements of a specific client (1080p,4k, etc.) Encoding maps video bitstreams to the proper codec, color space, and resolution for each corresponding client. This ensures that when you stream your favorite 4k blue ray that you don’t end up getting 720p quality. This process is extremely compute intensive and requires a tremendous upfront cost to facilitate.
Storing video is required post encoding process and requires a large amount of disk space. This is often exacerbated by the fact that videos must be stored in multiple formats. Delivering these video files is extremely compute intensive, so current systems usually store video once and then cache it to different locations.
Delivering is the next logical step of providing video to an end user. The process is done by delivering chunks of video bitstreams to the client and then parsing them together to match time stamps and video segments. Delivering video uses a tremendous amount of bandwidth, limiting the amount and type of content that can be played for consumers.
Each CDN process within the Video Coin network will operate as a marketplace where miners receive VID to rent out their services and end users pay VID to use them. Below is an example of a VideoCoin smart contract in action.
The encoding Marketplace
1. Source video is input to the VideoCoin Client Software, along with encoder configuration parameters, like resolution, bitrate, and codec.
2. Client software splits input video into segments.
3. Client polls available compute miners to accept current transcoding job.
4. Compute miners accept the job and client issues transactions.
5. Miners finish the job, provide proof of work.
6. Client makes payments to miners.
The Storage Marketplace
1. Client polls available storage miners to accept storage job.
2. Storage miners determine cost for renting out their disk space and accept the job.
3. Storage miners issue client transactions and finish the job, providing proof of work.
4. Client makes payments to miners.
The Delivery Miners
1. Client requests video to be played and polls current delivery miners
2. Delivery miners in close proximity who are willing to accept fee for distribution respond with offer message to client
3. Client can then accept the offer message from nodes in distribution pool
4. Distribution miner then establishes a connection with the consumption node and delivers the video
To make sure that bad actors do not tamper with video or attempt to steal information, a verifier pool of mining nodes will be established. This verifier pool will be based on delegated proof of stake and will ensure that each mining task is done properly and without fault. The miners will stake X amount of VID in order to get added to the pool. Three winners are chosen from this pool with one node being assigned “Alpha” status. (The algorithm weights the miners with the most VID more chances to win the pool) After being chosen, the Alpha node of the mining pool will inspect each transaction and either confirm and write to the blockchain or will conclude a process to be faulty and deny the transaction. Verifying the Alpha node is done by the other winners of the verifier pool. If the Alpha node is deemed to be incorrect they are removed from the pool and their stake is taken. If they are correct they earn the block reward.
The cost reduction achieved by using decentralized CDN’s is through the segmentation of video encoding tasks. The VideoCoin network allows for encoding processes to be split and run in parallel using ffmpeg. This is possible because blockchains allows for trust to be formed through anonymous entities. Since video encoding tasks can be split into smaller subtasks, commodity-based hardware will be able to participate in the process. Ordinarily this process is limited to compute intensive resources, which limits supply and cause the per unit cost of encoding to be higher. Downwards price pressure is to be expected with a much larger market competing on cost for encoding tasks. Other than the expected benefits seen from price reduction are reduced regulatory pressures, increased vendor price flexibility and reduced pirating.
In traditional CDN models, the encoding process is not split, or run in parallel, because the costs and trust required to facilitate this is too high. Blockchain technology enables this split encoding process by providing trust amongst unknown entities. Instead of the costs centralizing around an ISP or CDN, this system allows it to be shared among all market participants.
DISTRIBUTION
VideoCoin has issued up to 881.94 million VideoCoin (VID) tokens to be distributed throughout the network. Of the tokens, 105.83 million (12%) has been sold in a private presale which raised the company over $50 million (Hard Cap).
A large portion of VID tokens, roughly 70%, will be distributed to the mining network via airdrop. To be effective, VideoCoin needs to develop a large network of miners to facilitate a sustainable amount of CDN transactions. As a result, they plan to incentivize this cohort will the largest number of tokens, acting as their best PR.
The company has allocated roughly 10% of all tokens for internal use which will compensate and incentivize engineers working on the project. Three more percent will be allocated to advisors assisting the team on developing the business. It is currently unknown whether these tokens will be held in a lockup. The remaining 2.2% will go towards marketing the project with an additional 1.5% allocated to both an acquisition fund and the firms foundation. The acquisition fund will serve as a vehicle to acquire mining pools, as well as facilitate other strategic plays.
Management
Leading the VideoCoin effort is Founder and CEO Halsey Minor, inventor of CNET and early investor of Salesforce. Assisting Halsey are executives from the likes of Intel, Paramount, and Fox. Some notable individuals include Hanno Base, the CTO of 20th century fox film, John Ward, Emmy award winner and head of content operations at Direct TV, and Randal Kaplan, founder of Akamai Technologies.
P.S. Big thanks to John Ward for taking the time to chat with me about VideoCoin and informing me on how this product can change the video infrastructure marketplace.
