PROPS by YouNow, Livepeer, and the Road to Decentralization
One of the leading social live streaming companies, YouNow, recently shared an exciting new project that they’ve been working on for a year. They announced a many-to-many live video platform called the PROPS Project, which, among other things:
- Introduces a cryptocurrency into their social streaming experience.
- Opens up their ecosystem to allow other developers to create experiences
- Flips their entire business model on its head, allowing content creators, curators, and users to keep the vast majority of the revenue that they generate — a much larger percentage than was possible in the existing closed proprietary model.
This is undoubtedly a bold move for a company that already generates quite a bit of revenue and has many millions of active users, but it’s one that I became very excited about as soon as I began to learn about how YouNow thinks about their business and the live social video landscape. They recognize that decentralization and the token-based models of the future provide the alignment with their user base that a centralized, toll-taking model popular within the large social networking monopolies of today, can never quite achieve. In the PROPS ecosystem, all holders of their token are aligned to take the actions that result in the best long term experience for users. This largely being the creation, curation, and participation in high quality live content.
The project that I work on, Livepeer, is also building in the live video streaming world, so it’s not a surprise that upon seeing the PROPS announcement, many folks have reached out to mention it to me, and asked why I’m advising YouNow on it. When Eric and I were forming the thesis around Livepeer, we envisioned a world of peer-to-peer video applications that let content creators monetize their time and participate in the world economy through sharing expertise or entertainment. We set out to build the infrastructure that could enable hundreds of different apps to exist to serve different needs for different sets of users, and PROPS is one such example of the exact type of platform that helps users accomplish this goal.
While on the surface, we’re both in the video world, the protocols behind PROPS and Livepeer focus on very different things that are complementary to one another:
- PROPS is designed around the economics of live video for users. Its goal is to reward content creators, curators, and developers according to how much value they contribute to social streaming applications.
- Livepeer is designed to provide the infrastructure upon which apps and services can be built to broadcast video on the internet. It rewards providers of technical infrastructure for creating a cheap, scalable infrastructure for streaming live video.
In other words, Livepeer can provide the open infrastructure that makes it possible for apps built on PROPS to stream video in a scalable, pay-as-you-go, decentralized way.
What both projects have in common is that we all believe in the many benefits of decentralization. Starting with quite a bit of existing infrastructure and a large user base is an advantage in the ability to get to market for PROPS and bring cryptocurrency to millions of users on day one. But it’s also a challenge to fully decentralize over time. This is the main focus of my advisory role — decentralization.
PROPS will be starting off upon launch with a moderately decentralized economy, but over the coming years it may look to take the following steps:
- Fully decentralize the economy — move from whitelisted partner apps with transparent reward engines to fully algorithmic and open token reward distributions.
- Open up the platform — while the economics and token distributions are transparent on the Ethereum blockchain from day 1, the internal code and infrastructure that powers much of the video experience is not. PROPS has publicly committed to open sourcing much of this software in the coming year.
- Decentralize the infrastructure — as it stands today, YouNow still needs to build, run, and pay for the proprietary infrastructure needed to power the video aspects of the live applications that use PROPS. This costs money, so it either needs to be paid via a tax in the PROPS network, or absorbed via the token appreciation business model. In the future however, as decentralized video infrastructure solutions, like Livepeer, emerge, apps built on the PROPS network can fund the costs directly, even better aligning token holder’s incentives amongst a fully decentralized network, rather than operating within an economy that powers a group of centralized providers (apps in the PROPS ecosystem).
There’s a long way to go between where we are as a decentralized tech ecosystem today, and where we need to be before we can support a fully decentralized social experience at scale, like PROPS and their first app Rize, intend to offer. Ethereum needs to scale to be able to mitigate the effects of network congestion during high usage, payment channel solutions like Raiden need to be rolled out on the main net, incentivized storage solutions like Swarm and Filecoin need to come to production, and decentralized streaming infrastructure like the Livepeer network needs to be up and running and cost effective.
For now, PROPS is taking the sensible approach of moving the economy on to the blockchain so that users can take their rewards with them and be paid out transparently, but is keeping much of the infrastructure and UX centralized in order to avoid sacrificing anything that users would notice in their day to day usability. We all believe in a future, where this sacrifice won’t be necessary. It’s exciting to be building towards that point, where content creators can be rewarded for their time and creativity without the reliance on any central parties controlling their data, monetization, or audience.