What is Numeraire (NMR)?

What is Numeraire (NMR)

Numeraire is a software that acts as a hedge fund that aims to allow users to trade shares on the Ethereum blockchain.

The idea is that users can do business based on artificial intelligence and predictions made by a global network of data scientists using blockchain technology to staking on the cryptocurrency on certain forecasts.

Numeraire has two applications aimed at different types of traders:

  • Signals — A means of loading stock market strategies that support a specific style of action or trading.
  • Tournament — A weekly competition where users submit trading algorithms on stock exchanges allowing anyone to staking on the most likely outcome.

For everything to work, NMR, Numeraire's native cryptocurrency, is needed as a means of staking results, making payouts, and rewarding tournament participants.

In addition, the ecosystem relies on the Erasure protocol, a set of smart contracts over the Ethereum blockchain that allows Numeraire to either reward users who staking their NMR coins for a correct result, or destroy it if they were wrong.

Who Created Numeraire?

Who Created the Numeraire

Numerai, the company that created Numeraire, was founded in San Francisco, California in 2015 by Richard Craib and was funded through four separate funding rounds that spanned from April 2016 to June 2020, raising a total of US$ 21,5 million.

Some notable investors include Union Square Ventures, Paradigm, Placeholder and Howard Morgan, founder of Renaissance Technologies.

In 2017, the Numeraire token (sometimes referred to as a currency) launched on the Ethereum core network without an Initial Coin Offer (ICO), instead Numerai issued one million NMR tokens to 12.000 data scientists based on past contributions in Numerai Tournaments.

Why Does Numeraire Coin (NMR) Have Value?

The NMR cryptocurrency is used to power all Numerai applications, with users staked in various prediction models and are rewarded or punished based on their performance.

While NMRs are continually mined and flared, their supply is limited, meaning that, according to the software's rules, there will only be 21 million NMRs.

Numeraire price

 

How Does Numeraire Work?

Numerai operates an artificial intelligence aggregation model, called a “meta model”, which incorporates all the predictions it receives from participants in its application network.

The hedge fund then algorithmically trades stocks in the stock market based on this model, and also allows any user accessing its network to use its models when accessing its suite of products.

Numeral Tournament

The Numerai Tournament is a weekly contest organized by Numerai that collects market predictions from data scientists and pays for NMR tokens.

To participate, users submit their predictions for a dataset through a staking mechanism, and the predictions are further analyzed and scored based on their accuracy.

Participants who staking NMR tokens for the forecast The correct one will gain new mined NMR tokens and, if not, the staked NMR tokens will be burned, or permanently destroyed.

It is noteworthy that, while there are contests held every week, the scoring and payment period takes place every four weeks.

Numeral signs

Numerai Signals is a continuous application hosted by Numerai where participants upload stock exchange predictions for a chance to win NMR tokens.

In practice, users send a signal reflecting a trading strategy about one of the 5000 stocks available in the “Numerai stock universe”.

While the underlying data used to generate a signal may differ, such as P/E ratios, RSI or social media sentiment, the signals themselves are submitted in the same format: stock tickers and numerical target values.

Once submitted, participants are scored and rewarded similarly to the Numerai Tournament, where target predictions determine whether a user will be rewarded in the NMR or if their participation will be burned.

Why Use Numeraire NMR?

Numeraire may be of interest to data scientists looking to be rewarded for their market analysis and may also be attractive to financial analysts who want to earn extra money for data-driven strategies.

Investors may also want to add the criptomoeda NMR their portfolio if they believe the market will one day favor hedge fund applications.

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