Is Livepeer (LPT) Halal or Haram?
Shariah compliance review of Livepeer (LPT) by Islamic finance scholars at EthicalNode, with separate verdicts for trading and for staking.
Trading verdict: Comfortable
Launched in 2017, Livepeer is the first live video streaming network protocol that is fully decentralized. The platform aims to become a viable blockchain-based, economically efficient alternative to centralized broadcasting solutions for all new and existing broadcaster companies. Sharlife.my Analisys: The purpose of this project is Neutral and complies with Shariah
Staking verdict: Comfortable
Delegators stake their LPT tokens to support Orchestrators, strengthening the network's security and reliability. This process ensures participants have a vested interest in the system's proper functioning and acts as collateral against malicious activities. Additionally, it empowers delegators with voting rights in network governance, allowing them to influence protocol proposals and the network’s direction. LPT is a staking token that participants who want to perform work on the network stake in order to coordinate how work gets distributed on the network, and to provide security that the work will get done honestly and correctly. LPT has the following purposes: - It serves as a bonding mechanism in a delegated proof of stake system, in which stake is delegated towards transcoders (or validators) who participate in the protocol to transcode video and validate work. The token, and potential slashing that occurs due to protocol violation, is necessary in order to secure the network against a number of attacks. More below. - It routes work through the network in proportion to the amount of staked and delegated token, essentially serving as a coordination mechanism. - It is a unit of account that is specific to the Livepeer ecosystem, which forms the basis of a SectorCoin concept, applicable to additional functionality to be introduced in the future [4]. Services such as DVR, closed captioning, ad insertion/monetization, and analytics can all plug into the Livepeer ecosystem and potentially make use of the security provided by staking LPT. Livepeer has a two layer consensus system. The LPT ledger and transactions are secured by the underlying blockchain, such as Ethereum. Any transfer of the LPT token or any transaction in the system can be considered to have been confirmed with the same security as the underlying proof of work or proof of stake blockchain. The second layer however, dictates the distribution of newly generated LPT. This is governed by the Livepeer Smart Contract, and participation in the protocol by various actors. While there is no consensus required per say, in terms of acceptance and validation of previous blocks, the protocol defines rules for participation and conditions upon which actors will be penalized (slashed) for failing to fulfill their role. This second level of consensus governing the newly generated token is based upon Delegated Proof of Stake (DPOS), as inspired by systems like Bitshares, Steem, Tendermint, and Casper. The role of validators in the network is played by Transcoders. Any user can delegate their stake towards a transcoder, who then needs to perform transcoding jobs in the network, participate in the work verification protocol, and invoke functions on chain at specific intervals to validate this work. The protocol will distribute fees and newly generated token, and it will slash the stake of badly behaved actors. The validation result will be recorded on-chain via Truebit after it performs the validation, so there will be no room for disputes between the broadcaster and the transcoder. Attacks. This section contains a survey of the various ways that malicious actors may try to attack the Livepeer network. We use a rational attacker model in which the attacker makes decisions based upon their own economic self interest. A number of attacks are mitigated via it being unprofitable to conduct such attacks, but we also strive to ensure that at the worst the network suffers decrease of efficiency in the case of a sustained unprofitable attack, and doesn't suffer a failure. Consensus Attacks. As mentioned previously, consensus in the Livepeer ecosystem is provided by the underlying blockchain platform (Ethereum for example). 51% attacks, double spends of Livepeer Token, and forks of the network would require the same resources and cost-of-attack as Ethereum itself. Livepeer is a staked based protocol, and while Transcoders have the role of participating in the work verification process and the token reward distribution process, they actually do not have the role of validating or accepting other Transcoders' work. There is no concept of a chain, nor is there validation of previous blocks. There simply exists the economic incentives to verify one's own work and distribute one's own portion of token allocations when it is one's turn. As such, attacks that are seen in a proof of stake protocols such as the Long Range Attack, the Nothing at Stake problem, and The Bribe Attack don't apply, as there is no opportunity to attempt to sign multiple blocks or attempt to create a longer chain from an earlier state. However, one should be aware that as the underlying blockchain migrates to proof of stake, these attacks do threaten to undermine Livepeer if the benefit of carrying them out on Livepeer were to exceed the cost of attack on Ethereum itself. You can read the rest of the white-paper on the official website.
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