Livepeer Protocol Scaling During Times of High Ethereum Gas Prices

Doug Petkanics
Sep 1, 2020 · 7 min read

The Livepeer video infrastructure network uses the Ethereum blockchain in order to secure work, settle payments, and incentivize people all around the world to provide their infrastructure for video encoding work. One of the promises of the Streamflow scaling update back in January, 2020, was that as Ethereum became more expensive to use, Livepeer video infrastructure itself would not become more expensive.

As this post is being published in September, 2020, the costs to use Ethereum are at an all time high — almost 500 times higher than they were at the genesis of Livepeer. And while broadcasting costs on Livepeer do remain low, the cost to operate infrastructure on Livepeer, or to stake Livepeer token, are not fully immune to these incredible increases in prices. This post aims to communicate the plan in both the short and long term, for how the Livepeer community is planning to address and mitigate these high costs for its different types of users.

A Quick Background on Ethereum Transaction Costs and Gas
A full description of what “gas” is on the Ethereum blockchain is beyond the scope of this post, but you can think of it as an estimation for how much it costs to take an action on the blockchain in Livepeer, like staking token, registering a new node, or claiming the fees and token rewards that you have earned. Gas costs were between 1gwei-20gwei for the majority of the 2.5 years the protocol has been live. Today they stand at almost 500 gwei. Certain actions in Livepeer cost more gas than others because they require more space on the blockchain. More details below for each action, but for comparative purposes, note that something that cost approximately $1 in gas at 10gwei a few months ago, might cost a user $50 in gas today. You can see why this needs to be addressed.

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Ethereum gas prices are higher than they have ever been.

Broadcasters and Apps — Using Livepeer to Transcode Video

Short term solution: Broadcasters can increase their ETH deposits to access lower prices.

Long term considerations: R&D is going into mitigating the large deposit requirements by making improvements to the payment protocol mechanics and/or leveraging other layer two payment scaling solutions.

Token Holders — Securing and QA-ing the Livepeer Network Through Staking and Governance

This is an urgent issue for Livepeer, with 1000’s of token holders “under water” on this equation. However on the bright side, the community has been hard at work, and there are short term solutions proposed, and far along in the protocol update process, which can unlock all of this value for users without significant costs. There is a two pronged approach:

  • Livepeer Improvement Proposal (LIP) 36, proposes changing the accounting algorithm to eliminate the burden of doing the round by round accounting on each user. It’s a complex update, but when implemented, going forward users can claim at any time at low cost.
  • LIP Issue #52, addresses all the yet-to-be-claimed LPT from the past. It proposes a community ratified earnings snapshot, which will let users submit one low-cost transaction to get “up to date”, at which point they can use the above transaction going forward to stay up to date.

Note that something like a one-time state snapshot might have felt messy or centralized prior to the introduction of Livepeer’s decentralized governance process, which involves LIPs, community review, and polling. But now that this process is in place and has been used to get community consensus on other updates, the community has the chance to fully review and approve a mechanism like this, for everyone’s benefit.

Short term: Use the LIP process to consider implementing the two above changes, which will make the costs of claiming earnings constant, relative to the number of rounds which have passed.

Long term: Even though these transaction costs won’t grow with the passing # of rounds, they will still rise and fall with rising and falling gas prices, and won’t be immune to another 50x increase. See below for general longer term research that allows Livepeer itself to stay low cost, but still get the security provided by layer 1 chains like Ethereum.

Node Operators — Running Infrastructure on Livepeer

One discussion that may lead to an improvement proposal is happening live in this forum thread. It suggests only generating rewards every 7 rounds (or some other interval) rather than every round, in order to reduce the # of transactions and costs, while keeping the reward amounts the same. It comes with some tradeoffs in terms of the requirement to stay active for at least 7 days rather than 1 day, but may be a good short term tradeoff to make.

Short term: Participate in the above discussion and consider moving it towards a community proposal and vote.

Long term: More Layer 2 and side chain R&D — see below.

Longer Term Possibilities

That said, with an eye towards the future, the project invests quite a bit in R&D and staying on top of the latest areas of research. One of the most interesting and actionable areas here in the medium term (months) are Optimistic rollups, which let actions like payments and staking take place on an L2 chain, with trust anchored in the layer 1 Ethereum chain. The team has been digging into to solutions and collaborating with various builders in this space, and there are indications that nice scaling solutions are possible here.

An even longer term area of research, which has been ongoing for years, involves looking at own-chain/shard architectures such as Parachains, Cosmos Zones, or ETH2 shard based deployments of the Livepeer protocol. In these environments you might sacrifice realtime composability with additional protocols (which should have minimal effect on core Livepeer as it exists today), but you gain significant capacity within your own protocol without contention for block space. Cross-chain/shard transactions would be enabled by the underlying hubs. There are all sorts of questions that are unanswered here, but the teams working on these solutions are making fast progress as well. There’s no short term plan to target any migration to a solution like this, but as Livepeer sees evidence that it’s viable, it can always be considered.


If you’re interested in getting involved in the finer details of these discussions, please check in on the LIPs and the Livepeer Forum.

Livepeer Blog

Decentralized live video streaming platform built on…

Thanks to Yondon Fu

Doug Petkanics

Written by

Building live streaming on the blockchain at Livepeer. Previously Founder, VP Eng at Wildcard and Hyperpublic (acquired by Groupon).

Livepeer Blog

Decentralized live video streaming platform built on Ethereum -

Doug Petkanics

Written by

Building live streaming on the blockchain at Livepeer. Previously Founder, VP Eng at Wildcard and Hyperpublic (acquired by Groupon).

Livepeer Blog

Decentralized live video streaming platform built on Ethereum -

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