Numerai has been making strides since they first launched their outsourced analysis contest. Now, they’ve announced their deployment on the Ethereum blockchain, August 27, 2019. Numerai allows participants to make price predictions for stocks in the Russell 3000 index on a daily basis and be rewarded if they have a strong track record. With the addition of decentralized alternative investment management to Ethereum’s DeFi stack, it shows that anything and everything in financial services can be recreated on Ethereum.
How Numerai Works
Numerai has built two proprietary applications through smart contracts: Erasure Quant and ErasureBay.
Erasure Quant is the contest for daily price predictions on the Russell 3000. Participants are rewarded based on their past predictions, which are locked into an immutable ledger. This is an open template that can now be used by anyone to crowd source information of any variety.
ErasureBay is a decentralized marketplace that allows participants to create signals that can be bought by those seeking that particular information. The point of this is to create a track record for participants signals; as their past performance improves, more people will want to buy their signals.
The project believes that risking money on data is a testament to the reliability of that data. Skin in the game yields more dependable results.
Payment can be done via any cryptocurrency, but it is likely that most participants will want to use assets like ETH, wBTC, or the native Numerai token (NMR) as they are easily compatible with smart contract escrow requirements.
When parties agree to a contract, they stake their asset, and if any participant doesn’t abide by the rules set by the contract, they are punished by having a portion of their staked asset burned.
Deepening Decentralized Finance
Synthetix and Set Protocol are two high potential projects that help users build investment portfolios. Now that Numerai has been added to the stack, the advent of crowdsourced analysis for financial markets has also reached Ethereum.
At this point, it’s difficult to imagine a financial service that cannot be recreated on Ethereum.