Livepeer’s Pioneering Layer 2 Migration — Confluence — proceeds to Community Vote

For the past 5 months, the Livepeer core team has been focused on designing and delivering a solution to the significant Layer 1 gas fees faced by Livepeer Network participants: the migration of the Livepeer protocol to Ethereum Layer 2 (L2).

This week, this project reached a significant milestone. As part of the Livepeer Improvement Proposal (LIP) governance process, the proposed design of the Livepeer protocol’s L2 migration has moved to formal proposed status as Confluence — Arbitrum One Migration (LIP-73). As a result, an on-chain poll has been created for active Orchestrators to vote to accept or reject Livepeer’s L2 migration design.

Migration of the Livepeer protocol to L2 was first presented to the community as an idea in September 2021. In October, following initial research and community input, two Draft LIPs were created. Following additional research, testing and community feedback, the proposed L2 migration design was revised as Confluence LIP-73, which entered the Last Call governance phase on December 27.

Pioneering L2 Migration Design

L2 migration is one of the most complex and challenging tasks facing Ethereum-based projects today. The Livepeer core team has pioneered solutions to these challenges with the design of the Confluence protocol upgrade.

A layer 2 solution is essentially a chain that piggybacks off the security of Ethereum layer 1. One of the key design challenges facing Ethereum-based protocols is how to ensure sovereignty over their own contracts. Thus, a core objective for the Livepeer engineering team throughout this initiative has been to ensure that Livepeer governance retains control over the Livepeer Token (LPT). To achieve this, Livepeer engineers created their own contracts for bridging from L1 to L2 that integrate with Arbitrum’s contracts, instead of just using Arbitrum’s standard ERC20 bridge. In the latter scenario, the LPT would be escrowed in Arbitrum contracts and outside the realm of Livepeer governance. In the former scenario, the LPT will be escrowed in Livepeer contracts, and therefore under Livepeer’s governance. As a result, Livepeer’s L2 contracts will also be upgradable: should more desirable layer 2 solutions present themselves in the future, the Livepeer protocol can be easily adapted.

Livepeer’s migration is especially complex. Not only does it involve moving assets from L1 to L2, it also requires the coordination of software upgrades by node operators in tandem. While asset migration is nothing new to L1 blockchain developers, Livepeer is among the first infrastructure protocols built on top of a blockchain to migrate to L2.

What is LIP-73?

LIP-73 is a proposed technical design to migrate the Livepeer protocol that, once fully implemented, will have the following effects:

• Orchestrators will no longer be able to receive work, fees, and inflationary rewards on L1
• Orchestrators will need to submit a transaction on L1 to migrate their delegated stake to L2 on the Livepeer Explorer
• Delegators will be able to submit a transaction on L2 to claim their stake
• Protocol inflation will only happen on L2
• Protocol transactions will no longer be supported on L1

In addition to describing this technical design for the community’s formal approval, the LIP asks the community whether or not the Livepeer governance multisig can take the following actions needed to execute L2 migration:

• Pause protocol actions on L1 and enable protocol actions on L2
• Take a snapshot of L1 state (a record of all L1 balances including earned fees and rewards so that they can be moved to L2)
• Queue subsequent upgrade to enable delegator claiming of balances on L2 based on the snapshot
• Allow for a 7-day community review period of the snapshot to ensure balances and fees are accurate before delegators can claim their balances on L2
• Enable delegators to claim balances and subsequent rewards on L2

Ongoing Security and Due Diligence

Since entering the Last Call phase on December 27, Confluence LIP-73 has been proceeding through an extensive due diligence and security review process. With strong community engagement, a public testnet took place from January 13–27 to help Livepeer network stakeholders familiarize themselves with the migration workflow and identify fixes, all of which are now completed and can be viewed here.

An audit of the Confluence smart contracts has also been completed, with the help of audit firm C4. The core team has reviewed the results of the audit and completed mitigations. As security is an ongoing priority for the Livepeer protocol, the core team will continue its due diligence and engage the community openly in this process.

Get Out The Livepeer Vote!

It’s time to cast your ballot for Confluence! As of Today, February 3, Orchestrators have approximately 7 days to cast their vote via the Livepeer explorer. The exact polling period is determined by the number of blocks required to complete 10 rounds starting from the time the poll was created on February 1.

Voting for LIP-73 will take place on L1. This is because LIP-73 is itself a proposal to move all aspects of the protocol, including governance, to L2. Thus, in order to approve LIP-73, the current governance process must be used, which involves voting on L1. Orchestrators should therefore expect a small gas cost to sign the vote transaction.

Livepeer uses a stake-weighted voting system. In order to pass, the LIP must be supported by 33.33% of all staked (delegated) LPT and at least 50% of votes cast. If a Delegator disagrees with their Orchestrator’s vote, the Delegator may vote independently.

Delegators: please encourage your Orchestrators to vote! Orchestrators: please vote!