Network Marketplace Model

How supply, demand, price, and settlement combine into the Livepeer Network’s open compute marketplace, and how honest work is enforced without a central operator.

Market Shape

The Livepeer Network is a posted-price market for GPU compute. Operators on the supply side publish their capabilities and prices. Gateways on the demand side discover, score, and route work to them. Payment runs continuously through probabilistic micropayments, with on-chain settlement only when a ticket wins.

The shape is deliberate. An auction would force every job through a bidding round, adding latency the workloads cannot absorb. On-chain settlement per job would cost more than the work itself. The marketplace runs continuously off-chain so per-pixel video and per-token AI remain economical at production volume.

Work and Value Flow

Two flows run continuously across the marketplace. Work flows from clients through gateways to orchestrators. Value flows in the opposite direction, mostly off-chain, with periodic on-chain settlement.

The diagram is the marketplace. Solid arrows are continuous off-chain traffic; dashed arrows are the periodic on-chain settlement. Most jobs never produce a dashed arrow. The marketplace runs at the speed of the solid lines, anchored by the dashed ones.

Settlement Boundary

The boundary between what the Protocol records and what stays off-chain is sharp. The Protocol sees deposits, winning tickets, active-set membership, and inflation distribution. Everything else is direct gateway-to-orchestrator traffic.

This split is what lets per-pixel and per-token pricing remain economical at production volume. On-chain settlement per segment would cost more than the work itself; off-chain ticketing with periodic redemption keeps the cost ratio sustainable.

Probabilistic Micropayments

The mechanism that makes the off-chain settlement work is the probabilistic micropayment ticket. Every job segment carries a ticket. Most tickets do not win and never touch the chain. Only winning tickets are redeemed on-chain, where the gateway’s deposit pays the orchestrator the ticket’s full face value.

The expected value of any single ticket is faceValue × winProb. A gateway sets the win probability so that the per-segment expected payment matches the work being purchased. An orchestrator validates each ticket against the parameters it advertised in OrchestratorInfo; tickets signed against stale parameters are rejected. Redemption itself is asynchronous: an orchestrator can batch winning tickets and redeem them at convenient times relative to gas prices.

The design relies on a collaborative randomness scheme: the gateway’s signature and the orchestrator’s recipientRand together determine whether a ticket wins. Neither party can predict winners alone.

Honesty Enforcement

The Network produces verifiable work without a central operator. Three mechanisms stack: stake exposure, fast verification, and the discovery surface itself.

On-chain slashing exists in the Protocol but is dormant: the Verifier role is set to 0x0. Today, honest work is enforced by stake exposure (delegator withdrawal), fast verification, and selection feedback. Slashing reactivation is a governance question, not a network change.

The three mechanisms compose. Stake makes misbehaviour costly. Verification detects it when it happens. Selection routes around operators that produce it. None of the three depends on a central authority.

Related Pages

Purpose, properties, actors, where to go.

The Network’s structure and surfaces.

Staking, rewards, settlement, rounds.

Operator-side pricing, staking, earnings.