Treasury Overview

Formal model of the Livepeer Treasury as a governance-controlled protocol asset allocator.

Executive Summary

The Livepeer Treasury is the governance-controlled pool of protocol-managed assets used to fund ecosystem development, security research, infrastructure support, and other strategically aligned allocations.

Treasury control is enforced at the protocol layer (on-chain) through governance execution. The treasury is not controlled by off-chain committees in the enforcement sense; rather, governance proposals deterministically authorize transfers and actions.

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1. Formal Definition

Let:

• (T) = treasury balance (in relevant asset units)
• (A_k) = allocation amount executed by proposal (k)

Treasury balance update after allocation (k):

[ T’ = T - A_k ]

More generally, after a set of allocations ({A_1, A_2, \dots, A_n}):

[ T_n = T_0 - \sum_^ A_k ]

Where each (A_k) is authorized via governance.

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2. Architectural Context

2.1 Protocol Layer

At the protocol layer:

• Governance contracts authorize allocations
• Execution contracts (e.g., timelock/treasury execution logic) perform transfers
• On-chain state is the source of truth

Canonical contract registry: Contract Addresses

2.2 Network Layer

At the network layer, treasury-funded initiatives may affect:

• Orchestrator adoption
• Developer tooling
• Ecosystem applications

But treasury enforcement remains on-chain.

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3. Treasury Purpose and Economic Rationale

A protocol treasury exists to:

1. Fund public goods aligned with protocol growth
2. Reduce underinvestment in shared infrastructure
3. Support long-horizon research and development
4. Provide mechanism for strategic ecosystem interventions

From an economic standpoint, the treasury is a coordination instrument for funding non-excludable benefits that markets underprovide.

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4. Treasury Governance Model

Treasury decisions are executed through the governance lifecycle.

Let:

• (B_T) = total bonded stake
• (B_i) = bonded stake attributed to voter (i)

Voting power:

[ V_i = \frac ]

Thus, the treasury inherits governance security properties.

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5. Security Model

Treasury security depends on:

1. Total bonded stake (B_T)
2. Stake distribution (concentration)
3. Quorum and timelock configuration

Capital required to control outcomes:

[ Capital_ \ge \theta B_T ]

A treasury is therefore as secure as the governance system controlling it.

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6. Risks and Failure Modes

Key risks include:

• Governance capture — stake concentration
• Low participation — quorum risk
• Mis-specified calldata — execution failure
• Misaligned incentives — allocation inefficiency

Treasury is not automatically “good”; its outcomes depend on governance process quality.

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7. System Diagram

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8. Protocol vs Network Separation

Protocol (On-Chain):

• Treasury custody and execution
• Governance authorization
• Deterministic on-chain transfers

Network (Off-Chain):

• Allocation recipients execute work (development, infra)
• Ecosystem growth effects
• Operational delivery

Treasury is enforced by protocol logic; outcomes occur through off-chain delivery.

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References

• Livepeer Protocol Repository
• Contract Registry