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Livepeer uses both its native token (LPT) and Ethereum (ETH) to power its network and compensate actors for their contributions. ETH pays for compute work performed. LPT coordinates staking, delegation, governance, and inflation-based participation incentives. The two income streams are distinct in origin and denomination. Fee revenue in ETH reflects actual network usage: video transcoding and AI inference demand. Inflation rewards in LPT reflect the protocol’s bootstrapping phase, sustaining security and participation while fee revenue grows toward sufficiency. Protocol parameters governing inflation are adjusted through governance — verify current values at explorer.livepeer.org.

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1. Staking flow (Delegators to Orchestrators)

Staking bonds LPT into the BondingManager contract, backing an orchestrator’s position in the active set and earning inflation rewards. Token approval: Delegators approve the BondingManager to transfer their LPT via the standard ERC-20 approval pattern before bonding. Bonding: Delegators call Bond(amount, orchestratorAddress), which transfers LPT from the delegator to the BondingManager, updates the orchestrator’s total delegated stake, and adjusts the orchestrator’s position in the transcoder pool. The pool is sorted by delegated stake and maintained as a linked list; callers supply position hints to keep insertions O(1). Orchestrator registration: To enter the active set, a node bonds LPT to itself, calls Transcoder(rewardCut, feeShare) to register commission parameters, and sets a service URI via SetServiceURI(). The service URI is how gateways discover and connect to the orchestrator off-chain. The active set size is governance-controlled — verify the current cap at explorer.livepeer.org.

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2. Reward flow (Minter to Orchestrators to Delegators)

Each round, active orchestrators call Reward() on the BondingManager to mint their share of the round’s inflationary token issuance. Reward calculation:
  1. Orchestrator calls Reward() on BondingManager.
  2. BondingManager queries CurrentMintableTokens() from the Minter.
  3. Minter calculates mintable tokens proportional to the orchestrator’s share of total delegated stake.
  4. Reward is distributed to the orchestrator’s earnings pool.
  5. Orchestrator retains their rewardCut commission.
  6. Remaining rewards accumulate for delegators proportionally.
Claiming earnings: Delegators call ClaimEarnings(endRound) to realise accumulated rewards and fees from past rounds. Inflation mechanics: The currentInflation rate adjusts each round toward targetBondingRate. When the fraction of LPT bonded falls below the target, currentInflation rises by inflationChange per round. When it exceeds the target, the rate falls. The current targetBondingRate is 50% (500000000 on-chain). As of Q3 2025, staking participation sat at 48.7% — just below the target — causing inflation to tick upward to approximately 28% annualised. A governance proposal (LIP-107) to reduce targetBondingRate to 46% with an accelerated inflationChange is under active community discussion as of early 2026 but has not passed. A subsequent proposal to introduce inflationCeiling and inflationFloor bounds (LIP-100) is planned but also not yet enacted. Monitor forum.livepeer.org and explorer.livepeer.org/governance for current status.

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3. Payment flow (Gateways to Orchestrators)

The payment system uses probabilistic micropayments to settle compute fees without a per-segment on-chain transaction. Gateway deposits: Gateways fund their account via FundDepositAndReserve() on the TicketBroker contract:
  • Deposit: Locked collateral protecting against front-running; cannot be used immediately.
  • Reserve: Available pool from which winning ticket redemptions are paid.
Off-chain ticket creation: For each video segment or AI inference job, the gateway creates a signed ticket with a faceValue and winProbability and sends it off-chain to the orchestrator alongside the job. Most tickets do not win — a 1% win probability means one in one hundred tickets triggers a redemption. Ticket validation and queuing: The orchestrator validates the ticket’s signature and expiration, calculates whether it wins using recipientRand, and queues winning tickets for redemption. The gateway’s available reserve (MaxFloat) is tracked to ensure sufficient funds exist. On-chain redemption: The orchestrator calls RedeemWinningTicket(ticket, sig, recipientRand) on the TicketBroker. The contract validates the ticket, transfers faceValue from the gateway’s reserve to the orchestrator, and updates claimedReserve in BondingManager. This achieves approximately 99% reduction in on-chain transaction volume compared with per-segment settlement.

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4. Fee flow (Orchestrators to Delegators)

Fees from ticket redemptions accumulate in the orchestrator’s earnings pool each round and distribute to delegators proportionally.
  • Orchestrator retains their feeShare commission.
  • Remaining fees distribute to delegators in proportion to their bonded stake.
  • Delegators claim accumulated fees and rewards together via ClaimEarnings().

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5. Withdrawal flows

Unstaking (delegators):
  1. Call Unbond(amount) — creates an unbonding lock.
  2. Wait the unbonding period. The current unbonding period is 7 rounds (approximately 7 days at one round per day); verify at explorer.livepeer.org as this is governance-controlled.
  3. Call WithdrawStake(unbondingLockId) — returns LPT to the delegator’s wallet.
Payment withdrawal (gateways):
  1. Call Unlock() on TicketBroker to begin the unlock period.
  2. Wait the unlock period.
  3. Call Withdraw() to receive remaining deposit and reserve balances.

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Economic context

Livepeer’s economic health is measured by the trajectory of fee revenue relative to inflation rewards. Q3 2025 figures (Messari State of Livepeer Q3 2025):
  • Total staking rewards: approximately **18.1M∗∗forthequarter(up3018.1M** for the quarter (up 30% QoQ from 13.9M in Q2 2025).
  • AI workloads: over 72% of total protocol fee revenue in Q3, up from 55% in Q2.
  • 27,845 winning tickets processed — a 37% increase from Q2 — with average fee per ticket rising 69% to approximately $5.28.
  • Staking participation: 48.7%, just below the 50% target.
  • Annualised inflation rate: approximately 28% at end of Q3.
Fee revenue is growing. AI inference is the dominant demand driver. The inflation-to-fee ratio remains large, and the community is actively debating LIP-107 and related proposals to manage it. The long-run design assumes fee revenue eventually sustains the network without dependence on continuous token dilution — dynamic inflation is the bootstrapping mechanism, not the target state.

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Complete money flow

  1. Token holders bond LPT through BondingManager (staking).
  2. Minter issues new LPT each round and distributes it to active orchestrators via BondingManager (inflation rewards).
  3. Orchestrators distribute a portion of rewards to delegators after retaining rewardCut.
  4. Gateways deposit ETH into TicketBroker (payment reserves).
  5. Orchestrators redeem winning tickets and receive ETH from TicketBroker (usage fees).
  6. Orchestrators distribute a portion of fees to delegators after retaining feeShare.
  7. Delegators claim accumulated rewards and fees via ClaimEarnings().
Staking secures the network and earns inflation rewards. Active orchestrators earn ETH fees from gateways. Delegators participate in both streams without running infrastructure. Probabilistic payments enable cost-efficient micropayments at network scale.

Core mechanisms

Staking, delegation, probabilistic payments, and round mechanics in full detail.

Livepeer token

LPT’s role in staking, governance, and the L1-to-Arbitrum bridge.

Governance model

How LIPs are proposed, voted on, and how protocol parameters change.

Design philosophy

The engineering trade-offs behind inflation design, probabilistic payments, and protocol-network separation.
Last modified on April 7, 2026