Amidst SEC Crackdown on ICO Tokens, Numerai Hedge Fund Looks to Decentralize its Coin
Numerai is an AI-powered hedge fund. The investment data it uses to make trades is crowdsourced. In a recent announcement, the company released an information marketplace that it has dubbed Erasure. This marketplace allows users to buy and sell trading data via the Numerai token called Numeraire.
Decentralizing The Token
In a recent announcement, the Numerai CEO made it clear that the company would make it impossible to create more tokens in the future. This is in line with plans to decentralize the network.
Since 2015, Numerai has been crowdsourcing trading data, which its AI uses to trade. The company usually looks for investment tips, stock prediction, models, and algorithms. Data scientists and other contributors provide this information. Numerai will then create a financial model based on the data and uses it to execute trading. Initially, the platform rewarded contributors with BTC. However, it introduced the Numeraire token in 2017.
Unlike other related platforms, Numerai distributes the tokens via airdrops instead of using an ICO. However, the platform now plans to reduce the token supply to 45% or 11 million tokens and stop minting new tokens. Richard Craib, the founder, said they would throw away the key, making it impossible to create new tokens. This appears that the platform plans to decentralize.
SEC Crackdown On Crypto Securities
This decentralization push by Numerai is taking place at the same time when the SEC is going after crypto coins that behave like securities. The chair of the SEC, Jay Clayton recently said that at one time he thought Ethereum was a security. However, he has since changed that mindset since the crypto is decentralized. Ripple has made similar efforts with the XRP.
Recent Numerai Efforts
A month ago, Numerai said that its investment data would now be open source. This will be possible via the Erasure marketplace. It will make it possible for any user to upload predictions backed by solid data. These predictions can then be sold on the marketplace.
However, those who use Erasure would need to have Numeraire tokens to stake and purchase the predictions. The launch of Erasure addresses the market collapse problems that the company was facing. In the past, contributors were asked to make hundreds of predictions with a chance of having one rewarded.
With the new model, contributors will have to stake the prediction. If the prediction does really badly, the stake will burn. This is a way to discourage bad predictions and reward good ones. As a result, Erasure will eliminate the expensive process of cleaning data.
The founder, Craib, believes that it might be the best use case for crypto thus far. He previously worked as a trader before he launched Numerai. Craib has faith that this model will help participants produce quality data.
Staking ensures that every user takes every precaution possible to produce accurate data. Otherwise, they will lose their tokens. Craib also believes that major hedge funds will find the Erasure platform quite attractive.