In March 21st, AI hedge fund and forecast the market start-up company Numerai announced on twitter, it’s the center of the data market Erasure has received a $11 million financing of ICO, Paradigm and Placeholder led.
Note that the Paradigm and Placeholder through the purchase of NMR, direct injection is the Erasure protocol, rather than the parent company. Numerai founder Craib said that the financing will be used to recruit engineers for Erasure, Erasure is Numerai to the center of the data market, the market will allow users to upload data to the IPFS network on stock prediction.
Public data shows, Paradigm by Coinbase co-founder Fred Ehrsam, Matt Huang, a former partner of Sequoia Capital, Pantera Capital Charles Noyes co founded former employees, has raised $400 million, the direction of investment include: encryption currency (ICO), early project chain and trading areas; Placeholder Ventures is focused on risk investment institutions the investment chain block technology, distributed information network, the company worked at USV Joel Joel Monegro and Chris Burniske led.
Numerai’s history can be traced back to 2015. Originally as a hedge fund was established, aimed at linkage analysts and hedge funds, which provide better ways to analyze sales data for hedge fund analysts, screening of high quality prediction, make better investment.
Imagine you were a period of study on Apple company, you predicted iPhone sales in Chinese will exceed expectations, Apple’s stock price will soar. Therefore, you may buy Apple shares. But the capital market is complicated, even if sales forecast for iPhone Chinese results may be completely correct, but may still lose money. Because there are also many risk factors, such as the dollar and the RMB exchange rate fluctuations, or the overall decline in the U.S. stock market, Apple shares also fell in may.
Compared to the decision not to buy Apple stock, and no effective information publicly available, will your forecast sold to a hedge fund might be a better choice. The hedge fund trading strategies to hedge market risk, currency risk and other risks, so as to get full value from the information. The individual transactions may be small and the expected return, volatility and risk. But you may predict in the diversification of hedge funds, low volatility in the portfolio can bring greater wealth effect.
But Craib believes that the current market forecast information, asymmetric information and pain points: the seller information trapped, because there is no molding market, also not to be able to assess the predictive quality of the system; the buyer cannot predict the quality of the information and the evaluation of the reliability of the identity of the seller.
In this regard, Numerai aims to provide a decentralized market data Erasure. The platform “Erasure” literally means “erase”, from George Orwell saying: “the past is gone, erasure forgotten lies a fact”. In Erasure, the user can advance about his stock market forecast data, the premise is that you need to add a time stamp for each upload forecast, similar to the proof of existence. The market will establish anyone can verify the track record, to ensure the authenticity and the invariance of each prediction.
The prediction data will be stored in the IPFS network, Craib Numerai quantitative model will be more than 10000 of global stock stock forecast data generated every day, all these data add to the Ethernet square can be very expensive, the data will be uploaded to IPFS, Erasure to achieve low cost storage for each data source. These Erasure will store the file address (called hash) is sent to the Ethernet square block chain to get timestamp. By submitting a IPFS hash to the Ethereum file, the forecast will receive time stamp.
In addition, the issue of Numerai ecological NMR in tokens, its role is to bet. In other words, the prediction and forecast information will need to buy tokens to bet, if the prediction was established, the seller won the bet token; if the prediction is proved to be false, the seller will lose the bet tokens.
However, even if the seller’s prediction accuracy rate reached more than 70%, the hedge fund will doubt the accuracy of forecast each time after all, including the seller, no one can really determine 100%. If the forecast error, buyers really need some recourse.
In this regard, Erasure set up a “griefing (pain)” option, the “1:10 pain coefficient” means, the buyer (hedge funds) $1 loss, can have the right to choose whether to destroy the seller’s $10 shares. With the development of market, the seller will be adjusted to show their pain factors, quality or fear. Some sellers may give 1:50 the pain coefficient on the expression of quality prediction confidence, while other sellers may give 1:1 to express the pain coefficient for fear of meeting overbearing buyers.
Craib said, Erasure announced in October 2018, plans to launch in late 2019. Once launched, Erasure will allow users to predict the sale to any investment fund in the public network. Although at this stage based on the predictive model of Numerai mainly concentrated in the traditional asset, but after the launch of Erasure, will be able to predict any assets. Numerai platform currently has 44000 registered users. Prior to this, Numerai has raised $7 million 500 thousand.
According to CoinMarketCap data, after the news, the Nomeraire token price was up nearly 19%.
Reference: “Numerai s Master Plan
An Unstoppable Predictions Marketplace Introducing Erasure –