Numerai AUM vs Numeraire MarketCap

High guys. I just would like to know if there is any article or video of the community where someone explains if there is any correlation between the limitations Numeraire market cap could have due to the limitations Numarai Could have as a Fund. In the Youtube Channel, (this video, minute 1:23:00 Numerai Fireside Chat with Richard Craib (founder and CEO of Numerai) and Anson Chu (CTO) | 2020 Q4 - YouTube ) richard explains two things. First they are mostly 5x Leveraged and second, that they only trade on monday. If they increase the AUM to 1B they would need to trade every day of the week to be able manage the market impact of each trade, and that would be the AUM Limit for now. As I understand, those facts limitate the marketcap of NMR to 5B ( 5x leverage of 1B) for now… If they progress regards the volume and market impact limitations (that Im pretty sure they will, just as renaissance Technologies did) then they could increase those limits accordingly.

Im pretty sure Im making some wrong or imprecise assumptions on this statement, and thats why I am here asking for help. But I dont see how it would be possible to have no correlation at all between the Numarai AUM vs Numaraire Market Cap… I mean, I dont think is possible that NMR reaches, for example, a Market Cap of 50 billions if the AUM of numaraire are yet under 1B… that would be impossible right? Thank you very much, Im new in the community but also excited about it. Peace!

If they increase the AUM to 1B they would need to trade every day of the week to be able manage the market impact of each trade, and that would be the AUM Limit for now

Why? The market is far bigger than a couple of billion per day. Or is that actually correct? I think one point of reference could be Rentech’s Medallion fund that was capped at 10 B (?) I think because of market impact. But other quant funds do get a lot bigger. No issues here I think.

As I understand, those facts limitate the marketcap of NMR to 5B ( 5x leverage of 1B) for now

NMR market cap is not directly linked to fund performance.
There is an indirect corellation of course with more AUM generating more money for Numerai, potentially increasing NMR payouts and making the coin more attractive but the fund doesn’t put a cap on the maximum NMR value, as this is purely driven by demand. If enough people want to buy NRM either to stake or to speculate then the token can get far more valuable than the AUM or Numerai’s trading volume.

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I thought this too. Simons and his team, were able to carefully manage until 10B. That’s correct. But richard said it himself in the video. Maybe they need volatility and low marketcap stocks gave them that, on those, volume is definitely a restrictive variable. Minute 1:23:00 Numerai Fireside Chat with Richard Craib (founder and CEO of Numerai) and Anson Chu (CTO) | 2020 Q4 - YouTube )

Interesting. So a way to see it would be that AUM growth (with a proper management and results, obviously) could incentive Tournaments and signals Payouts growth, as payments grow, it could incentive the coin demand growth… and so, the market cap of the coin. So as you say, it’s an indirect correlation .That said, the growth of the coin, is kind of limited to the use that tournament participants gave to it for now… while AUM could increase exponentially if Numerai keeps getting attention from others institutional investors. So in proportion, the growth of Numerai, could be more aggressive than the growth of Numeraire. Right now they both are around 200M. I mean, they could also incentive demand on the coin by opening similar uses, like letting people stake on a automated and diversified “portafolio” or a kind of “etf” of participants in the tournament… but probably they just don’t want to rush things too much due to the deflationary behavior the coin has.

By the way, Thank you very much for your answer. It helped! If anyone else has something to add to the topic, you are all welcome to the chat. I’m excited with the project lol.

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