Key InsightsTranscoding usage on the Livepeer network increased 10% QoQ, with demand-side transcoding fees rising 18% QoQ, driven by increased adoption and Ethereum’s price appreciation.Staking rewards increased 19% QoQ to $25 million, driven by higher token issuance, improved real yield, and rising network fees. Livepeer’s market capitalization grew 15% QoQ to $554 million.AI Subnet fees declined 52% QoQ to $7,000, with ticket issuance falling 62% QoQ, but a 25% increase in per-ticket price suggests a shift toward higher-value AI workloads.The Livepeer AI SDK launched in Q4 2024, enhancing AI-powered media generation, while Cascade introduced real-time AI video processing, supporting AI-driven livestream analytics, automated video agents, and interactive avatars.PrimerBuilding decentralized video apps like Twitch or TikTok requires live and on-demand video streaming infrastructure. Based on a user’s bandwidth and device, video content needs to be processed — i.e., transcoded — into viewable formats. While cloud providers like AWS, Google, or Microsoft are commonplace solutions for video transcoding, they incur high costs. Livepeer is an open, permissionless network that provides a decentralized marketplace for video infrastructure, supporting both live and on-demand streaming. Its compute marketplace enables participants to contribute GPU resources for various workloads, including video transcoding and AI-powered video processing. As AI-driven video models demand significantly more GPU compute than text and image generation, Livepeer offers a scalable and cost-efficient solution for video-related compute tasks. The network is designed to lower transcoding costs for end users by up to 10x. Within Livepeer’s decentralized transcoding network, there are three key participants:Node operators — called "Orchestrators" — route transcoding jobs. The amount of work a node operator can perform is proportional to how many Livepeer native tokens (LPT) it stakes. Node operators earn ETH fees and newly minted LPT rewards.Service nodes — called "Transcoders" — provide compute resources for node operators and deliver video transcoding. In return, they earn ETH fees. Typically, Orchestrators and Transcoders run within the same machine (combined setup).Delegators stake LPT towards effective node operators to help secure the Livepeer network. Staking is rewarded with a portion of both ETH fees and LPT rewards.Livepeer has also expanded beyond video transcoding by introducing the AI Subnet, a specialized network for AI inference tasks. This subnet supports AI-powered video generation capabilities, including text-to-image, image-to-image, and image-to-video processing. These services cater to use cases in entertainment, social media, and gaming.The AI Subnet is currently in its Beta phase, but it plans to expand model support and enable broader AI workloads in the future. Website / X (Twitter) / DiscordKey MetricsResearch ContentsLivepeer Q4 2024 BriefPerformance AnalysisDemand for Livepeer services comes from apps and developers needing video transcoding, live-streaming, and video generation capabilities. This includes decentralized social media (DeSoc) applications, Web3-native platforms, and traditional Web2 applications requiring scalable video infrastructure. While platforms like TikTok, Twitch, Spotify, or SoundCloud rely on centralized infrastructure for streaming, similar applications in the Web3 space — such as decentralized video platforms, music streaming apps with tokenized incentives, or NFT-based media platforms — could leverage Livepeer’s decentralized video streaming and transcoding services.Network Livepeer’s network usage can be gauged by estimating the number of minutes of video transcoded. Livepeer’s transcoding network usage increased by 10% QoQ, rising from 32 million in Q3 to 35 million in Q4 2024, and saw a 15% YoY increase from 30 million in Q4 2023. This growth was likely driven by AI-powered video processing advancements, real-time streaming enhancements, and expanding developer adoption.A key driver was the Livepeer AI SDK launch in Q4 2024, which enabled AI-powered media generation such as image-to-video, upscaling, and AI-enhanced text processing, increasing video processing demand. The introduction of Cascade further accelerated adoption by shifting from batch AI processing to real-time AI video enhancements, supporting AI-driven livestream analytics, automated video agents, and interactive avatars, significantly increasing transcoding workloads.Additionally, Livepeer’s partnership with Fishtank, an interactive streaming platform, played a role in sustaining growth. After reaching one million viewers and generating $3 million in revenue in Q3 2024, Fishtank’s continued use of Livepeer Studio in Q4 reinforced Livepeer’s position as a leading decentralized video infrastructure provider.Fees from TranscodingServices using the Livepeer network pay demand-side fees in ETH to access transcoding services. Node operators (orchestrators) earn these fees for processing video and distribute a portion to their delegators based on their fee-sharing structure. The likelihood of receiving transcoding work is influenced by stake weight; orchestrators with higher stake are prioritized for more work, leading to greater earnings in transcoding fees. This system incentivizes both node operators and delegators, reinforcing network participation and security.Livepeer’s demand-side fees from transcoding increased 18% QoQ, rising from $62,000 in Q3 2024 to $73,000 in Q4 2024, and saw an 8% YoY increase from $68,000 in Q4 2023, aligning with overall usage growth. This higher-than-expected fee growth compared to usage was likely influenced by Ethereum’s price surge in Q4 2024, which increased approximately 11%.Since transcoding fees are often denominated in ETH, the rise in Ethereum’s value elevated the USD-equivalent fees collected on Livepeer, contributing to the strong 18% QoQ growth. Fees from Livepeer AIAccording to Messari's report, Livepeer’s AI Subnet, launched in Q3 2024, marked its expansion beyond transcoding by enabling AI-powered video generation using its GPU-based compute infrastructure. In Q4 2024, this evolution continued with Cascade, introducing real-time AI video processing for applications like automated video agents, live analytics, and AI-enhanced content creation. These advancements position Livepeer as a decentralized media compute provider, extending its role beyond traditional video transcoding.In the Livepeer AI ecosystem, tickets and fees represent the economic framework for compensating node operators performing AI-powered video processing. Winning tickets are issued as part of Livepeer’s probabilistic micropayment system, allowing operators to redeem them for ETH-based fees. These fees reflect demand for AI workloads, making them a key indicator of AI adoption and network revenue.In Q3 2024, Livepeer AI usage generated $15,000 in fees, accounting for 24% of the network’s total transcoding fees, with 4,800 tickets issued at an average cost of $3 per ticket. However, in Q4 2024, AI-related fees dropped to $7,000 (10% of total transcoding fees), with ticket issuance falling 62% QoQ to 1,847 tickets, and overall fees declining 52% QoQ. Despite this drop, the price per ticket increased 25%, from approximately $3 to $4, suggesting a shift toward higher-value AI workloads rather than a pure decline in demand.This decrease was likely driven by shifting network dynamics, pricing adjustments, and evolving AI workload distribution. The introduction of Cascade emphasized real-time AI-powered video processing, potentially diverting demand toward traditional transcoding, which remained more cost-effective. Additionally, Livepeer AI’s monetization structure may have been refined, influencing how fees were distributed among operators. The higher per-ticket price suggests that the network processed fewer but more resource-intensive AI jobs, possibly as platforms optimized usage after initial adoption spikes in Q3.Staking RewardsThe Livepeer network distributes staking rewards in LPT to node operators and delegators. To provide video services on the Livepeer network, node operators must stake LPT. A node operator’s stake weight comprises their own tokens and those delegated towards them. Staking rewards increased 19% QoQ, rising from $21 million in Q3 2024 to $25 million in Q4 2024, and surged 277% YoY from $7 million in Q4 2023. While an 8% QoQ increase in LPT price (from $14 to $15) and an 88% YoY surge (from $8) contributed to higher USD-denominated rewards, the increase was also influenced by higher inflationary emissions and rising real yield, despite a 10% decline in the staked ratio.The annualized daily inflation rate increased from 21% in Q3 to 23% in Q4 (up from 14% in Q4 2023), resulting in a higher token issuance rate. This suggests that even though the percentage of staked LPT decreased, the overall reward pool continued to expand due to increased token emissions. Additionally, the annualized daily real yield in USD increased from 30% in Q3 to 38% in Q4, up from 22% in Q4 2024, indicating that staking remained economically viable despite rising inflation. This growth was likely driven by higher network fees from transcoding activity, which supplemented staking returns. At the same time, the Livepeer community is evaluating potential adjustments to the inflation mechanism, including proposals to gradually reduce inflation to a more sustainable range.The combination of higher inflation-driven rewards, improved real yield, and network growth offsetting the declining staked ratio contributed to the 19% QoQ and 277% YoY increase in staking rewards. These trends suggest that Livepeer's staking incentives remain strong, even as staking participation declined, with token issuance and network demand driving overall reward distribution.Staking ParticipationThe Livepeer Token (LPT) operates under a Stake-for-Access (SFA) model, requiring node operators to stake LPT to perform work on the network. Over the past seven quarters, staking participation—the percentage of circulating LPT supply that is staked — has remained below the 50% target level. Additionally, the number of delegators has declined, decreasing from approximately 3,900 in Q4 2023 to 3,137 in Q4 2024.This downward trend in delegator participation suggests that, despite increased staking rewards, fewer participants are securing the network. Consequently, those who continue to stake may be earning a larger share of the rewards due to higher token emissions and network incentives. Daily LPT issuance steadily increased from 0.04% in December 2023 to above 0.06% by the end of September 2024. Despite this, the staking participation rate declined to nearly 43% in Q4 2024, remaining below the 50% equilibrium threshold that the protocol aims to maintain. For context, the dynamic LPT issuance in absolute terms follows the staking participation rate as below:When the participation rate falls below 50%, LPT issuance increases by 0.00005%. Conversely, when the participation rate passes 50%, LPT issuance drops by 0.00005%. An explanation for the staking participation staying below the 50% threshold is the incentive decoupling between staking and transcoding. Previous research found that the top five node operators by LPT staked earned roughly 40-50% of staking rewards but only ~20% of all transcoding fees. LPT’s market capitalization increased 15% QoQ to $554 million in Q4 2024, up from $482 million in Q3 2024, while its price rose 8% from $14 to $15 over the same period. This market cap growth outpaced price appreciation due to a 6% increase in circulating supply, which expanded from 35 million to 37 million LPT tokens, contributing approximately $30 million of the total $72 million market cap increase. The price appreciation despite the additional token supply suggests that demand kept pace with new issuance, potentially driven by network adoption, staking activity, or broader interest in decentralized video infrastructure. A potential factor in this growth is Livepeer’s inclusion in Grayscale’s Decentralized AI Fund in Q3 2024, which provided institutional recognition and exposure to accredited investors. This may have contributed to increased demand for LPT, supporting its role in AI-powered video processing and decentralized compute infrastructure. The 84% YoY price increase reflects broader market interest in Livepeer and its position within the decentralized AI and video streaming sector.Qualitative AnalysisPartnerships and Ecosystem ExpansionsAI Video Startup Program: The AI Video Startup Program, funded by Livepeer’s Grants Program, supports startups developing decentralized AI video technologies and apps. The program offers selected startups up to $20,000 in grant funding, infrastructure credits, and mentorship from the Livepeer team.AI Demo Day: In October 2024, Livepeer hosted AI Demo Day, where eight startups from its AI Video Startup Program showcased projects blending generative AI with decentralized infrastructure, highlighting innovative applications in the space.Real-Time Video AI Bootcamp: Launched in Q1 2025, the Real-Time Video AI Bootcamp is an educational program by Livepeer for developers and technical artists exploring AI-powered video processing. It offers workshops, hands-on project development, and a challenge with incentives to advance real-time video applications.Technological AdvancementLivepeer AI SDK: In Q4 2024, Livepeer launched an AI SDK to make generative AI more accessible through its decentralized GPU network. The SDK provides a cost-effective alternative to centralized AI services, supporting TypeScript, Python, and Go with OpenAPI-based integrations. It offers developer-friendly features, including type safety, intuitive APIs, and comprehensive documentation. The SDK enables text-to-image, image-to-video, upscaling, and AI-powered text processing, allowing developers to integrate advanced AI capabilities with minimal complexity. Future updates will introduce text-to-audio, image-to-text, and lipsync features, further expanding its AI toolkit. Livepeer’s AI Evolution: From AI Subnet to Cascade in Q4 2024: Livepeer’s AI Subnet, launched in Q3 2024, marked a key milestone in expanding the network’s AI video capabilities. By enabling node operators to earn fees for processing AI inference jobs, the AI Subnet introduced decentralized AI-powered services such as text-to-image, image-to-image, and image-to-video generation. By the end of Q3, 27 AI node operators were actively participating, with enhancements like speech-to-text via Whisper, Stable Diffusion 3 support, and generative AI customization expanding its capabilities.Building on this foundation, Q4 2024 saw the introduction of Cascade, a strategic shift toward real-time AI-powered video processing. While Livepeer has primarily been used for livestream video transcoding, Cascade extends these capabilities to real-time AI applications, including automated video agents, live analytics, and AI-enhanced content creation. Unlike traditional AI models that process recorded content, Cascade enables AI pipelines to analyze and enhance video streams in real-time, unlocking new use cases such as real-time sports analytics, automated monitoring, and interactive AI avatars.Leveraging Livepeer’s high-throughput streaming infrastructure — already supporting 80-90% of network activity — Cascade enhances the network’s role in AI-driven media processing. Recent upgrades, including support for more complex setups and multi-container GPU configurations, further improve scalability and efficiency.GovernanceE² - Education & Experience: In Q3 2024, the Livepeer community approved the E² - Education & Experience Focused SPE proposal. The initiative secured 4,000 LPT funding for a six-month exploration of AI’s role in creative industries.The project prioritizes AI literacy, public engagement, and technical development. It aims to drive Livepeer AI adoption through educational content, live demonstrations, and workflow enhancements. Key objectives include increasing AI-generated outputs, expanding social reach, and fostering industry partnerships.The initiative is structured in three phases—early development and workshops, content rollout and showcases, and ecosystem expansion through collaborations—and is led by a team with expertise in AI, blockchain, and digital media. Building on prior AI-driven creative projects, it seeks to enhance Livepeer’s technical capabilities, adoption, and brand visibility within the creative sector.Closing SummaryIn Q4 2024, Livepeer’s transcoding usage grew 10% QoQ to 35 million minutes, while fees from transcoding rose 18% QoQ to $73,000, supported by increased demand and Ethereum’s price appreciation. AI Subnet fees declined 52% QoQ to $7,000, but a 25% increase in per-ticket price suggests a shift toward higher-value AI workloads.Key developments included the launch of Cascade, enabling real-time AI-powered video processing, and the Livepeer AI SDK, enhancing AI media generation for developers. Fishtank’s continued adoption of Livepeer Studio sustained network growth, while Livepeer’s inclusion in Grayscale’s Decentralized AI Fund likely contributed to institutional recognition and LPT’s 15% QoQ market cap growth to $554 million.Governance initiatives focused on community-driven AI education through the E² - Education & Experience SPE proposal, securing 4,000 LPT to support AI literacy and public engagement.Looking ahead, Livepeer aims to expand real-time AI processing capabilities and strengthen its position as a decentralized media compute provider.