Numerai hands out ~1m NMR per year, with a market value of $40mm USD.
They’ve raised maybe $20-30mm USD of capital in the fund itself, and have never exceeded $100m in gross positions (otherwise they’d be filing a 13F). This throws off maybe a million per year in fees, if we’re being generous.
Once the treasury of printed NMR runs out, they’re generating about 1/40th of what’s necessary to even maintain the current collapsing payout ratio, if somehow their entire team works for free.
The only case where this doesn’t go to zero are effectively:
- people don’t care that payouts shrink 10x notional and maybe 100x on a ROR basis due to increasing NMR staked and no earnings with which to pay anyone
- they suddenly, after five years of no success, get good at fundraising. Note that equity market neutral funds have been out of favor for a decade, most launch with more capital than Numerai has raised, and this will never be palatable to tax-free investors like pensions and endowments that are the actual capital base in the lowish-return EMN space.
- they all renounce their US citizenship and start allowing stablecoin investments that can be used as an actual source of capital for trading
Short of some miraculous billion dollar capital raise, there’s nothing here to pay the bills, the team, and much less the model stakers. The current numerai valuation is supported only by new entrants enticed by potential triple digit returns that come from effectively printed money. As the payout ratio collapses, and the treasury runs out, it will be clear that the whole thing was only viable under the assumption they could print money or earn (and choose to share) tens of millions per year, while running a tiny hedge fund that never learned to capital raise.