Numerai: Is Erasure Protocol Just Getting Started?


Back in 2017, Numerai launched their product and the NMR token to feed their Hedge Fund with stock market predictions coming from data scientists, which were competing to provide the most accurate information, with a mechanism of stake/burn of NMR, the native token. Basically, if you were able to predict accurately something you would get paid for it. On the contrary, you would lose your money and reputation if you were wrong.

That was the beginning of Prediction Markets in the crypto space.

Prediction markets are defined as speculative markets, where information is used to make bets on the outcome of future events.

At that time, there was also another famous player; Augur and the REP token. However, the v1 of the protocol only went live in 2018 and was focused on a more “traditional” betting system, where anybody could use the protocol to create a prediction market on Ethereum.

In the same year, Numerai realised that they could use their mechanism of stake and burn, not only for them, but for everyone; the Erasure Protocol was born.

The Erasure Protocol

The idea behind Erasure Protocol is simple: if you have some valuable information (of any kind) but cannot use it for yourself, maybe, someone can and you could get paid for it. It is a win-win situation based on trust.

Trust? Not really.. Why? Let me explain but first, let me introduce the Protocol.

The team created two projects: Erasure Quant and Erasure Bay.

Erasure Quant is a stock picking tournament based on the Russell 3000 index. The goal is simple:

  • Provide stock market signals and put money at stake to show your confidence in your signal.

  • Get paid if Hedge Funds buy it.

  • Lose money if your signal is not accurate.

Erasure Bay is a marketplace for sourcing any information from the internet.

  • Anyone can ask a request (i.e. buyer of the information requested).

  • Anyone can fulfil a request (i.e. seller of the information requested), on a first come first serve basis, meaning the first one to fulfil the request get paid, the others don’t.

  • The seller has to put his own money at stake, so that the buyer can punish or reward based on the information received. As a result, information provided has to be of good quality, otherwise seller loses money because he is going to be punish.

Both are decentralised and based on Ethereum blockchain. So there is no need to trust anybody, as everything is registered on the blockchain and so is immutable. Problem solved.

We do like ErasureBay because the service is innovative and audacious:

  • Imagine that: you combine your twitter account to ask the Internet for information with the blockchain running in the background. And if you provide information, you can even make money out of it.

The old Numerai

Back in the days, Numerai, the original idea, was not decentralised as information provided was only used for Numerai Hedge Fund and it gave them critics as crypto is usually open source. And the NMR token had little utility as it was only used by few data scientists making stock predictions.

Now that the Erasure Protocol is live and open to everyone: has the situation changed?

Answers are there, as the Erasure Protocol is live on the Ethereum blockchain.

If you would like to know more about it, please subscribe and discover why Numerai and prediction markets are on our radar at Secret Salsa. We discuss user growth, risks and valuation of the token in the premium article.