Ever wondered, what is Numeraire? Simply put, it’s the unique cryptocurrency at the heart of the Numerai platform—enabling a collaborative hedge fund powered by data scientists’ predictions. This article takes you through the nuts and bolts of Numeraire (NMR), from its role in staking and predictions to how it rewards the sharpest minds in the field.
Key Takeaways
What is Numeraire (NMR)?
Numeraire (NMR) is more than just a digital asset; it’s the lifeblood of the Numerai platform. Numeraire adds invaluable utility to the Numerai ecosystem through its role in advanced predictive market capabilities, staking, and as a reward for users. Its unique function and role have set it apart in the crowded world of cryptocurrencies, making it a point of interest for many investors and data scientists alike, who closely monitor the numeraire price.
Numeraire's Role in Numerai
NMR occupies a pivotal position within the Numerai platform. It serves as the primary payment method, where it is staked on market predictions and used to reward participants in the Tournament app. The weekly tournaments offer a competitive platform for data scientists to submit their predictive models, with NMR tokens at stake.
This crowdsourcing approach encourages a decentralized collaboration, influencing the stock market trading strategies and trading style of the hedge fund through a stock market trading based artificial intelligence aggregation model stake-weighted meta model, utilizing trading algorithms. By allowing users to upload stock market strategies, the platform fosters a diverse range of ideas and techniques.
Numeraire as a Cryptocurrency
As an ERC-20 token on the Ethereum blockchain, Numeraire is not just a key player in the Numerai ecosystem but also a part of the broader cryptocurrency market. This positioning enables Numeraire to engage in decentralized financial transactions and work with smart contracts, leveraging Ethereum’s robust infrastructure.
The Founders and History of Numeraire
Every great innovation has a visionary at its helm, and for Numeraire, that individual is Richard Craib. Founded in December 2015, Numerai is the brainchild of Craib, a Cornell University graduate with a background in hedge fund management. Since its inception, Numerai has received backing from prominent entities such as Union Square Ventures, solidifying its footprint in the financial technology landscape.
Richard Craib: The Visionary Behind Numeraire
The mastermind behind Numerai and Numeraire, Richard Craib, is a Cornell University alumnus. Leveraging his background in hedge fund management, he was instrumental in creating Numerai. His vision was to build a platform that harnesses the power of artificial intelligence for hedge fund management, disrupting the traditional financial markets landscape.
Evolution of Numerai and Numeraire
Numerai has come a long way since its establishment as Numerai’s hedge fund in late 2015. It pioneered a unique approach by incorporating artificial intelligence into investment strategies, processing data in just a few seconds with the help of Numerai Signals.
In June 2019, Numerai made a significant change by reducing the initial supply cap of 21 million NMR tokens, creating a sense of scarcity and increasing the token’s potential value.
How Does Numeraire Work?
Numeraire functions via a distinctive mechanism that involves staking and rewarding. In Numeraire, staking involves the commitment of NMR tokens to support network operations and validate transactions, with the prospect of earning additional NMR as a reward. The staking mechanism uses a dynamic payout factor that adjusts in inverse proportion to the total NMR staked, maintaining a balanced reward distribution.
Staking NMR Tokens
NMR holders can stake their tokens on specific stock market predictions within the Numerai ecosystem, which are essentially stock market signals. By staking NMR tokens when submitting their prediction models, data scientists show their confidence in their predictions. Successful predictions earn more NMR for participants, with models being scored based on their correlation to actual market returns.
Notably, NMR tokens wagered on inaccurate predictions are eliminated, fostering an environment that prizes accuracy and discourages malpractice.
Earning Rewards with Numeraire
The potential to earn NMR tokens is a key driver for participation in the Numerai data science tournament, which utilizes machine learning. Accuracy leads to rewards, with earnings for each round determined by a formula integrating the staked amount, the model’s performance, and a dynamic payout factor.
The top 100 prediction models, as judged by market performance, receive additional rewards in Bitcoin and their staked NMR is returned, making the stakes even higher.
Unique Features of Numeraire
Numeraire’s distinguishing characteristics set it apart. Numeraire’s tokenomics is designed with a weekly token burn mechanism where tokens staked on losing predictions are burned, a feature unique within the cryptocurrency space. The finite supply of Numeraire tokens ensures protection against inflation, with no new tokens to be created after the initial supply is fully distributed.
Moreover, it leverages advanced technologies to facilitate trading and predictions, offering a decentralized hedge fund experience, setting it apart from traditional cryptocurrency endeavors.
Crowdsourcing Predictive Models
One of the most unique features of Numeraire is its crowdsourcing approach. It harnesses the expertise of a global network of data scientists, encouraging them to:
- Create predictive financial models using provided hedge fund-quality data
- Build models and stake NMR tokens in the Numerai Tournament
- Earn both Bitcoin and their staked NMR if their models perform well.
This approach not only democratizes the financial forecasting process but also creates a diverse pool of predictions for Numerai’s hedge fund.
The Erasure Protocol
The Erasure Protocol is a critical component of the Numeraire ecosystem. As an Ethereum-based platform, it enables participants to publish financial data and stake predictions using NMR tokens. This protocol enhances the trustworthiness of Numerai’s ecosystem by incentivizing high-quality financial predictions with staking, ensuring transparency of participants’ track records, and enforcing agreements.
Market Performance and Circulation of NMR Tokens
NMR’s market performance shows varied fluctuations. As of the latest metrics, the 24-hour trading volume of NMR is $--, indicating that the nmr price is influenced by crypto market volatility and numerous factors specific to the token’s ecosystem.
To date, Numerai has paid over $67 million to data scientists in NMR tokens, reflecting its substantial circulation among contributing participants.
Market Capitalization and Ranking
Often abbreviated as ‘market cap,’ market capitalization symbolizes the aggregate value of all mined coins of a specific cryptocurrency. As of the latest available data, Numeraire (NMR) has a market capitalization of approximately $88.20M and is ranked 463 among all cryptocurrencies by total market capitalization.
The market capitalization of Numeraire (NMR) is determined by multiplying the number of NMR coins in circulation by their current market price of $11.01.
Circulating Supply and Token Distribution
Initially, the maximum supply of Numeraire (NMR) tokens was set at 21 million. However, it was later reduced to 11 million to enhance scarcity. The current circulating supply of Numeraire (NMR) is reported at 8.01M out of a total supply of 10,747,047 NMR.
In an event aimed at fostering user engagement, 1 million NMR tokens were distributed to active participants on the Numerai platform.
Securing the Numeraire Network
Like other cryptocurrencies, Numeraire places a significant emphasis on security. The Numeraire network operates on the Ethereum blockchain, leveraging its security and interoperability features for full participation within the Ethereum ecosystem.
Ethereum and Smart Contracts
Numeraire’s security is supported by the Ethereum blockchain’s infrastructure, which enables the creation and execution of smart contracts vital for its operations. These smart contracts automatically execute trading strategies and stake outcomes, playing a significant role in the Numeraire ecosystem.
The Erasure protocol employs a set of smart contracts on the Ethereum network to ensure the integrity of the incentivization system within Numeraire.
Erasure Protocol for Trustworthiness
The Erasure Protocol enhances the trustworthiness of Numerai’s ecosystem by incentivizing high-quality financial predictions with staking, ensuring transparency of participants’ track records, and enforcing agreements.
All transactions and data accuracy within the Numeraire network are verifiable on the blockchain, thanks to the Erasure Protocol, which promotes trust by managing stakes and rewards in a transparent manner.
Participating in the Numerai Ecosystem
Engaging in the Numerai ecosystem offers opportunities to earn NMR tokens. Data scientists can stake their NMR tokens on their predictive models in the Numerai Tournament, and if their models perform well, they can earn both Bitcoin and their staked NMR.
Effective staking strategies involve:
How to Earn NMR Tokens
Although staking on predictions is a method to earn NMR tokens, it isn’t the sole avenue. Contributors to the Numerai ecosystem can earn NMR tokens through various activities. These include contributing to open-source projects or being involved in security and vulnerability reporting.
The Numerai ecosystem is dynamic, and new methods for earning NMR tokens may emerge, thus participants are encouraged to stay updated.
Trading and Investing with Numeraire
Numeraire can be traded or invested through centralized exchanges such as Bybit or decentralized exchanges leveraging ERC-20 compatible wallets. On Bybit, new users can purchase NMR directly with Visa or MasterCard credit and debit cards. After purchasing, NMR can be stored in personal crypto wallets or held within the user’s Bybit account.
For decentralized exchange users, NMR tokens can be traded and stored using ERC-20 compatible wallets such as MetaMask.
Summary
To wrap up, Numeraire (NMR) is a unique digital asset that plays a critical role in the Numerai ecosystem. Its functionality extends beyond being a mere digital currency. From being a vital part of the Numerai platform’s operations to being an ERC-20 token on the Ethereum blockchain, NMR has carved out a unique niche for itself in the cryptocurrency landscape.
Frequently Asked Questions
What do you mean by numeraire?
In economics, a numeraire is a basic standard by which the value of other goods is computed, typically represented by a single good. It allows for the comparison of the value of goods against one another.
What can be used as a numeraire?
You can use a currency or a product with a fixed price, such as money in the monetary economy, as a numeraire to determine the value of goods.
How does numeraire work?
Numeraire incentivizes users and data scientists to contribute prediction models and market signals using AI and machine learning, allowing them to earn NMR for their participation. This system is supported by cryptography and data science, creating a network of incentives for users and data scientists.
What is an example of a numeraire good?
One example of a numeraire good is the U.S. dollar, which acts as a benchmark for comparing the value of other goods or financial instruments. (based on Answer 2)
What is NMR Cryptocurrency?
NMR Cryptocurrency, also known as Numeraire (NMR), is the utility token for a platform used for staking on market predictions and as a payment method. It is associated with a San Francisco-based hedge fund that uses AI for investments.
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