What is Numeraire?
Numeraire is a decentralized “hedge fund” application that intends to allow users to trade stocks on the Ethereum blockchain.
Users will be able to make trades based on artificial intelligence and projections produced by a worldwide network of data scientists, who will utilize blockchain technology to stake Bitcoin on particular projections.
NMR, Numeraire’s native digital token, is essential to make things function as a method to wager on outcomes, process payments, and reward tournament players.
The Erasure protocol, a collection of smart contracts on the Ethereum blockchain that allows Numerai to either reward users who staked their NMR tokens on a right conclusion or destroy them if they were incorrect, is also used in the ecosystem.
How Does Numenaire Work?
In terms of the concept underlying its development, Numerai and the Numeraire token are unique. This is the first cryptocurrency to be produced and launched by a hedge firm, according to reports.
The NMR token is given to data scientists whose models do well in the Numerai tournament, which is one of its key advantages. As more individuals join the event and begin competing, the token gets more valuable.
Furthermore, the tournament models enable Numerai to actively engage in stock market trading depending on the outcomes given by participating projects. Numerai is one of the few hedge funds that depend heavily on AI-generated data projections because of its revolutionary approach to stock trading.
Numerai uses an artificial intelligence aggregation model dubbed a “meta model” to combine all of the predictions it gets from its application network members.
The hedge fund then uses this model to algorithmically trade shares in the stock market, and it also lets anybody on its network to employ its models by using its suite of products.
The Numerai Tournament is a weekly competition run by Numerai in which data scientists submit market forecasts in exchange for NMR tokens.
Users must submit their predictions for a dataset via a staking process in order to participate, and the predictions are then examined and graded based on their accuracy.
Participants who bet NMR tokens on the right prediction will get freshly minted NMR tokens, while those who bet incorrectly will have their staked NMR tokens burnt or permanently destroyed.
While events are conducted every week, the scoring and payment period takes place every four weeks.
Numerai Signals is a Numerai-hosted service where users may submit stock market forecasts for a chance to win NMR tokens.
In practice, users submit a signal based on a trading strategy for one of the 5000 companies in “Numerai’s stock universe.” While the underlying data utilized to produce a signal, such as P/E ratios, RSI, or social media mood, may change, the signals themselves are supplied in the same format: stock tickers and numerical target values.
What is the History of Numenaire?
Numerai, the firm that invented Numeraire, was formed in 2015 by Richard Craib in San Francisco, California, and raised a total of $21.5 million in four fundraising rounds running from April 2016 to June 2020. Union Square Ventures, Paradigm, Placeholder, and Howard Morgan, the creator of Renaissance Technologies, are among the major investors.
The Numeraire token (also known as a coin) was released on the Ethereum mainnet in 2017 without an Initial Coin Offering (ICO). Instead, Numerai distributed one million NMR tokens to 12,000 data scientists based on their previous participation in Numerai Tournaments.