Introducing Sustainable Public Goods Funding to Livepeer Through A Community Treasury

The Livepeer community has been hard at work over the past month designing and debating a new pre-proposal, codenamed Livepeer Delta, which attempts to further decentralize the Livepeer ecosystem by introducing a sustainable public goods funding mechanism into the protocol.

This post summarizes many of the highlights and key points from the proposal, but you can read the full Delta pre-proposal here.

The highlights of the proposal include:

• Introducing an onchain Livepeer Treasury, funded by current protocol inflation without any changes to Livepeer’s token economics, and governed by the community of Livepeer Token Holders.
• Suggested mechanisms for proactively and retroactively rewarding innovative video builders, and other stakeholder profiles, with LPT.
• On chain controls for adding users to, removing users from, or eliminating the security committee.

Background — Why address public goods funding now?
The Livepeer network has been running for 6 years, and the built in inflation funding mechanism has worked quite well at incentivizing and making funding available to the node operators and tool builders that support running the network. The protocol directly rewards node operator’s work through LPT issuance, they are able to attract stake towards their node and keep a commission, and many have become passionate members of the community who contribute great tools towards the vision.

However the Livepeer protocol has no direct mechanism to incentivize demand-side contributors — video builders who experiment with video apps, video concepts, or contribute video technology direct to the codebase. And this type of stakeholder is critical to Livepeer’s vision of being the world’s open video infrastructure, the leading platform for blockchain connected video, and the home community for innovators building in this space. Demand for using the network will grow if this video innovator community is a stakeholder in the project, interested in its innovation, utility, and success.

The best efforts at incentivizing and rewarding this type of contribution so far has been the community grants node program, which taps into inflation funding, and uses its rewards to target small grants for specific purposes. But the benevolent opt-in nature of staking towards this node means that the funding isn’t quite enough for full project sustainability, and its limited community management committee doesn’t quite represent the decentralized community empowerment over the future of the project’s sustainable funding that we should strive for.

So the Delta proposal attempts to ensure that:

1. Livepeer as a project can sustain itself and fund the public goods contributions necessary to power the ecosystem.
2. The mechanisms that power this are decentralized, open, transparent, and community governed.

Introducing the Livepeer Treasury

One way to solve for sustainable public goods funding is to introduce an onchain treasury, governed by the community of Livepeer token holders. The mechanism that is proposed for this is quite simple:

• Each round in Livepeer the protocol generates inflationary tokens split up amongst node operators and delegating token holders. The community will determine a TreasuryContributionPercent parameter, and this percent of the inflationary tokens will be directed into an onchain treasury smart contract, prior to the remaining tokens being split up as they were previously.

This will have no effect on the current tokeneconomic supply of LPT. It will slowly build up the treasury, a bit at a time, and the community can vote using Livepeer’s existing governance, to change the value of that parameter depending upon the ecosystem’s funding needs and effectiveness of how the treasury is being managed.

Governance
The tokens that make their way into the treasury need to be governed by the community of LPT holders, without any central party or intermediary responsible for distributions. Fortunately, there are many existing DAO frameworks and tooling options available to apply best practices here.

• The full proposal suggests using Livepeer’s existing governance mechanism — stake weighted delegated voting — to decide on releasing funds from the treasury to an address. It’s worth noting that stake weighted voting is a controversial topic, and the community is also discussing other mechanisms to combat some of the drawbacks in the thread.
• It further suggests that this level of community voting only approve proposals from sub-entities, which can be specialized, and use whatever governance they like, to better target funds to actual end recipients. For example, VideoBuilderDAO would propose to receive funds to target retroactive funding for video builder contributions. OrchestratorDAO would propose to receive funding to retroactively reward supply side tooling contributions. The existing grants program would become one of these entities, which applies for further funding pools to target builders proactively to enable contribution. But an individual seeking funding for their own project would be unlikely to apply to the treasury itself, and instead would go to grants or the example VideoBuilderDAO.

What happens next?

Livepeer’s existing community governance mechanism outlines a full process for proposing, debating, and voting on protocol updates. The Delta upgrade is very early on in the pre-proposal phase, but within a period of weeks it will hopefully move to the proposal phase, then the voting phase. In the meantime, there are several key ways to get involved and shape the future direction of Livepeer’s sustainable public goods funding.

1. Review the pre-proposal and discussion. Share your thoughts.
2. There will be a community call on Thursday, May 18th at 12:00pm ET where this will be the topic of discussion. Feel free to join, ask questions, and share ideas. Subscribe to the event in the Livepeer Discord, or subscribe to the Livepeer Community Call Calendar, to receive invite link and updates.
3. Engage with the sub-entities which will likely be proposing for and allocating funds out the treasuries. For example, the Video Builder, profile will likely be the users responsible for judging and allocating funds to innovative applications, hacks, and development contributions on the video side. Join the #developer-lounge channel, discuss video builder ideas, ask for this role, and get involved on the future of what VideoBuilderDAO can look like.

Introducing a community treasury brings the Livepeer project into a new era. A new utility for LPT is introduced, through its use not only in allocating and securing work on the Livepeer network, but also in its use in governance over sustainable funding mechanisms that power the ecosystem. Let’s work together to incorporate the feedback and inputs to make sure that this capability is introduced in a way that allows us to run and learn from tests, is decentralized and open, and is extensible for future iterations through the community’s will.