Numerai Cuts Total Supply by Half and Embraces Decentralization

Bob Coiney

December 6, 2018

What originally started as a centralized data marketplace used by Numerai’s hedge fund to make investments is about to become something more. In a recent statement, Numerai, the AI-powered predictive data network, announced a radical new plan of going ‘decentralized as fuck.’ The company will be cutting the maximum supply of its Numeraire (NMR) token by nearly half, from 21 million to 11 million, and giving up the keys, allowing them to mint new tokens.

With the introduction of Numerai’s new decentralized data marketplace, Erasure, the company will allow anyone to make predictions, stake them with cryptocurrency, develop a track record that can be verified by anybody as well as earn money in the process.

What is Numerai?

The company’s history dates back to 2015 when Richard Craib, founder of Numerai, wanted to make a hedge fund that offered a better way of selling good data analysis. Since its launch in June 2017 up until now, the hedge fund has been using its software to leverage the collected data for its own benefit, and it appears to be working effectively.

Source: Numerai

To date, Numerai has received about $7.5 million in funding and is backed by some the tech and crypto industries’ renowned names, including Howard Morgan, co-founder of Renaissance Technologies and First Round Capital, Peter Diamandis, founder of the Singularity University and the IBM Watson AI XPRIZE, Ash Fontana, board Member at Kaggle, as well as Union Square Ventures, among others.

Are regulations closer than we think?

Instead of launching NMR with an ICO, Numerai decided to go the airdrop route. The NMR tokens were distributed through their platform as payment for its users and airdrops, probably in the hopes of staying off the SEC’s radar. As regulations cloud the market now, more than ever, this sudden radical decentralization plan has gotten some people to believe that regulation might be coming.

In a recent interview for CoinDesk, Richard remarked that “Nothing we are doing now is a reactionary thing.” According to him, the SEC’s focus has been focused primarily on ICOs that exploited the unregulated market too much. When asked if Numerai is in contact with the SEC about its operations, Richard declined to comment. Nonetheless, according to the publication, he appeared relieved that they never decided to go the ICO route for the launch of NMR.

Welcome NMR 2.0

Instead of using it for its own profit, Numerai is opening its predictive marketplace for everyone to use. Similar to the current operating model, on Erasure users will be able to stake crypto on their prediction and win or lose its stake, depending on their score.

Richard remarked that the current supply of NMR is about 7 million, contrary to what CoinMarketCap shows. He added that 3 million tokens are closed for a decade, but that still leaves 1.7 million NMR in the shadows.

In an email for CoinDesk, Richard noted that he doesn’t really know what CoinMarketCap’s source of data is.

Since the maximum supply of NMR becomes 11M and the company is giving up on the ability to mint new ones, the launch of Erasure means the creation of 4 million. Given the rising regulatory concerns, Craib had appeared confident that Numerai’s new decentralization plan, giving its protocol in the hands of its users, will be enough to satisfy the SEC. Whether his beliefs last to become a reality remains to be seen.