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21 July 2022

Livepeer plots expansion into delivery, as Storj sniffs out AWS scraps

Cryptocurrency stocks may be suffering, but spirits are high among disruptors in the decentralized technology community, as Faultline discovered during our visit to the latest quarterly press call organized by The Web3 Index.

We commented just a couple of weeks ago on the uniquely privileged position of Livepeer, the decentralized transcoding platform provider which has more than enough capital to keep it ticking over while the cryptocurrencies on which its business model relies splutter on the stock market floor.

This was a chance to hear from others, such as Ben Golub, CEO of decentralized storage network Storj. Rallying the younger troops, Golub drummed up economic downturns as historically being positive for disruptive technologies like those represented during this week’s video call.

Times of hardship tend to drive people (and businesses) towards options that are cheaper, expounded Golub, and ultimately this is where innovation is born.

It will take several more quarterly press calls before we can assess the accuracy of these projections, so in the meantime let’s look at what Q2 2022 had in store for the likes of Storj.

What we love about Stroj is the outright honesty about how its business depends on sucking the blood from AWS. The company’s 1,500 nodes worldwide are positioned as a direct replacement for Amazon S3 (Simple Storage Service) – claiming to provide faster and more secure services at a fraction of the price.

Golub shared a chart plotting data that shows Storj is consistently as fast as AWS, or even faster in some cases. Nailing performance has allowed Storj to pick up new customers in both web2 use cases – those running apps in an efficient but private way – as well as emerging web3 folk.

The enterprise-grade decentralized storage network bills its model as Airbnb plus Dropbox – with tens of thousands of shared hard drives storing data on the network without access to any complete file or usable data. Storj is also celebrating its third year of never having lost a file.

The University of Edinburgh is a web2 client of Storj, which requires shifting tons of data around the world, while GodBehindBars – a video distribution site for the incarcerated – is a new web3 customer.

“People joke about web3 only being used by criminals, but it’s also being used to help them turn their lives around,” jested Golub.

Storj is seeing a lot of product activity in the media and entertainment space, according to Golub, from people creating and sharing videos online. Growth is also coming from web3 events, and next quarter’s focus is all about ensuring scalability by integrating with the tools web events platforms are using.

Storj saw active users spike 168% in Q2 2022, while paid data increased 63% and paid egress surged 88%. Storj is able to charge for egress because people who use the platform are not just doing so for storage, but also distribution too, so Storj can charge for the data being served. “Egress in many ways is better than data itself,” commented Golub, implying internal focus on more egress monetization features.

The scale of growth can be visualized as the Storj team were hyped about signing up the first petabyte-scale customer, and now the company is into the realm of clients peddling tens of petabytes each.

Circling back to the original topic of crypto stock slumps, Livepeer recently introduced a trial that allows node operators to set their own price points, with the hope that this analysis would glean insights into how to cope with sustained market pricing pressures.

Livepeer’s Yondon Fu, director of engineering, could not share any early results from these trials following Faultline’s probing, primarily due to the slowdown in demand triggered by Livepeer’s focus on web3 video features.

Fu justified this stagnation as being a temporary blip as Livepeer switches focus from web2 apps to web3 apps. Relatively speaking, there are fewer minutes in the web3 space today compared to web2, meaning the demand plateau was fully expected. Livepeer sees this as a necessary sacrifice to profit from the projected explosion of developer activity in social, NFT and metaverse experiences.

With that being said, Fu revealed that the roadmap includes updates on node software to make it easier for node operators to configure price thresholds, and also to negotiate prices in an automated fashion to avoid friction in manually setting prices – meaning node operators can be more reactive to changes in market prices.

As for Livepeer’s Q2 highlights reel, the company has processed 66 million minutes of video so far in 2022.

“The web3 space will represent the lion’s share of minutes in the long-term. We can already see some of the developer activity spikes in the last quarter, centered around hackathons and development events,” said Fu, reinforcing the event-focused demand seen by Storj.

The Livepeer Studio also launched in Q2 – a new video toolkit which Fu expects, rather optimistically, to become the de facto studio for web3 content.

Looking ahead to Q3 and Q4, Livepeer’s web3 video focus includes improved VoD support, and looking to add more distributed video ingest to the network, powered by studios and self-operated node operators.

Content delivery functionality is also on the radar, to expand Livepeer’s capabilities from compute into delivery, which is an increasing concern as customers scale. Investment in content delivery will promise lower costs and more capabilities for node operators to earn additional revenues.

Pocket Network was also on the press call emphasizing Q2 gains in the face of stock market uncertainty. The decentralized infrastructure middleware protocol, that facilitates multichain blockchain API access, saw steady growth from the last quarter, reaching an all-time high of 4 billion relays on the Pocket Network.

The Web3 Index came into being as a community-driven project aimed at measuring developer demand for web3 infrastructure protocols – i.e. those that use blockchain technology as a means to coordinate and secure user-owned infrastructure.

It aims to monitor usage fees paid into networks as a way to identify trends and track traction across web3 protocols.

The three focus areas are compute, bandwidth, and storage – although delivery could be added to this remit soon if comments from the web3 executives here are to be taken as gospel.