Understanding the Livepeer Token

Why LPT exists as a separate asset from ETH, what it lets a holder do, and how the protocol’s payment separation makes the network usable for service buyers without forcing them to acquire a protocol-specific token.

Why a separate token at all

The protocol could have charged for video and AI work in the same asset that secured the network. Most early protocol designs do exactly that. Livepeer chose payment separation - ETH for work, LPT for stake - because the two roles have different demands.

Service buyers want to pay for a service, not invest in a network. A gateway operator running an AI video application should not have to acquire, custody, and price-hedge a protocol-specific token to call inference. ETH is the natural unit of payment on Ethereum and on Arbitrum.

Operators want skin in the game proportional to their stake in the network. An orchestrator earning fees from production traffic should be exposed to the protocol’s economic security, not just to the spot price of compute. LPT is the staking unit. It sits between operator and network, mediating selection, governance, and slashing risk.

ETH satisfies the first requirement. LPT satisfies the second. Neither token does both.

The four jobs LPT does

Every function LPT performs is enforced on-chain through the Arbitrum-deployed protocol contracts.

Slashing today. The slashing function exists in the BondingManager contract, but the Verifier role is currently set to the null address, leaving slashing inoperative. It can be re-enabled through governance. The economic security model still relies on stake at risk - bonded LPT remains illiquid for the unbonding period, and is exposed to whatever slashing conditions governance later reactivates.

Payment separation in practice

The protocol creates two parallel value flows: ETH for compute, LPT for stake. Both flows settle on Arbitrum One. They meet at the orchestrator.

A gateway operator never has to acquire LPT. A delegator never has to pay for video work. An orchestrator participates in both flows: they are paid in ETH for compute, and they earn LPT inflation for the stake they have bonded.

The orchestrator’s feeShare parameter controls how much ETH passes through to delegators. The orchestrator’s rewardCut controls how much LPT inflation the orchestrator keeps as commission. Both are public, set by the orchestrator, and visible on the Explorer.

What inflation means for an LPT holder

LPT supply grows each round. Newly minted tokens go only to bonded stake. Unbonded LPT is diluted by every round it sits through.

The dilution is not theoretical. Every round of inflation that an unbonded holder sits through reduces their share of the total supply. The mechanism intends for stakeholders to either bond directly, delegate to an orchestrator they trust, or accept the dilution as the cost of liquidity.

A treasury cut, set by LIP-92, routes 10% of each round’s inflation into the on-chain treasury for ecosystem funding. The remaining 90% is distributed to bonded participants in proportion to their stake.

What an LPT holder can actually do

Three actions are available to anyone holding LPT. Each one has a different operational cost and a different earning profile.

Where to go next

The canonical reference: contract details, value flows, bonding mechanics.

How LPT-weighted voting works and how to use your voice.

Where to acquire LPT to delegate, bond, or run an orchestrator.

Live network data: inflation rate, bonded supply, orchestrators, and rewards.