Peer-to-peer (P2P) is a powerful platform for a variety of multimedia streaming applications over the Internet such as video-on-demand, video conferencing, live broadcasting, etc. A P2P system is extremely cost-effective since it utilizes the resources (CPU cycles, storage space, and uplink bandwidth) of peer machines.The decentralized and shared bandwidth nature of a P2P network, therefore, makes it an effective choice for implementing video conferencing applications. In this work, Vanets is presented , a P2P based video conferencing system that takes advantage of transcoding to optimally allocate streaming rates for all participating peers. The solution presented in this paper distinguishes between active and passive participants and enhances the video quality of the active participant.