People also cry when the NMR price is high because then it is risky to get into the tournament. The current period is a great time to get in though.
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Either I miss something or people miss something. I am confused to see such replies from such knowledgeable people as the matter in question is not about who (and when) cries but about a real problem. So let me repost my message from the #general chat to raise more awareness here:
You may look at it as any token (gold, coin, etc) used in online games. It’s “nothing”, but it has value anyway, as long as people keep playing the game. Our game lasts as long as the hedge fund generates profit in USD. Seems like a long game.
Yes and no. Online games sell tokens on their marketplace; they have a base fiat price, and then they might also have a resale value on a secondary market (but not cheaper than the official vendor price otherwise arbitrage is possible).
But in the NMR case, since the token value is not bound to USD/a stablecoin, the staking returns are highly skewed toward alpha/beta of the crypto market. That’s why we see cases when people have great models but awful ROI.
In other words, how many data scientists buy NMR to stake their models and how many crypto investors buy NMR to “diversify” their crypto portfolio because the NMR leadership is awesome (or whatever their DD reasoning is) and the token can go to the moon? What’s the ratio between people who have a direct interest in the project and crypto hoarders?
If the ratio is big, it’s not “Our game lasts as long as the hedge fund generates profit in USD.”. It’s about how many people give up due to volatility created by non-members of the project. And that’s because the majority of stake owners’ ROI would come from the crypto market alpha/beta and not from the actual models’ performance.
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Now, courtesy of @nyuton ,
~1.2M NMR out of 6.1M is staked in the tournament+signals.
I have yet to look into how the smart contract issues and burns tokens, but right off the bat it can be interpreted like this: more than 80% of your ROI can be attributed to market volatility and NOT to your model’s performance. And that’s if we don’t put the TC volatility and other factors on top.
So who are we, data scientists or hoarders?
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I already posted a proposal to move to a private PoA network on #general, but an even easier solution might be: if NumerAI becomes an official vendor and sets a baseline price for NMR, i.e. they are willing to buy any amount of NMR from anyone anytime at a constant price. This will set a baseline price like a stablecoin (i.e. as an investor you can’t lose more than that) without eliminating the secondary market price formation (if this is even needed, although motivation is not very clear to me).
Ideally, we would want to have it both ways: if we can buy and sell NMR at a specific price to the vendor. Thus making NMR a stablecoin as there are no arbitrage opportunities both ways, and if you don’t want to deal with NumerAI, you would be able to dispose of your tokens at any of the supported exchanges as well.
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I think they cannot do that for legal reasons. They can buy NMR on market (and most likely they do if the price is really low to provide support). But I guess they cannot really promise anything publicly - they would risk legal troubles and it could perhaps trigger discussion if the token is not a security by any chance.
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Yes @numerologist, you are right! Buying tokes/shares of a company that is trying things that has never been done before is a BET. If the company/fund doesn’t work. You can loose all your money. I guess everybody understands that. Buying NMR in this sense is certainly a bet on the future of the fund.
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As soon as the fund starts generating profits and AUM grows, things become more predictable. Numerai can easily ensure (with the profits at hand) that the token price doesn’t fall below a certain level. I assume, we have already reached that level: Investor Letter
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Supporting NMR buy buying it on the open market and stating it publicly are two different things. The latter has legal consequences.
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On the long run NMR has a chance to decorrelate from Bitcoin and represent the true supply/demand balance of the stock-market-prediction economy.
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Exactly, cheap NMR was a blessing for me, allowed me to get more serious about the tournament and start working on new models. If the issue is NMR price volatility, there were some measures mentioned on this forum, which should somehow mitigate it.
Long live NMR!
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Some interesting thoughts in this thread. If someone bullish on NMR is willing to take my crypto exposure so that I can participate only in the DS tournament, please let me know. I’m sure we can find a reasonable price for compensation for the risk, and I’m open to ideas to enforce it. Perhaps it is something the hedge fund can implement for us.
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I have been looking for a counterparty to swap with for over a year. The other options out there did not seem convenient 
Has there been any other discussion about a different system away from NMR?
I’m fairly new to Numerai and love the concept but NMR is by a very very long way the biggest drawback for me.
I’m UK based so I live in GBP. I’m training some models and I did my risk analysis on the cost of that with NMRGBP being in the £15-16 range. Today its at £13 which makes a massive difference to those numebrs.
Also the NMRGBP market is incredibly thin so to move any kind of volume the liquidity dries up. This means I’ll have to move all funds into USDT and then buy NMR with that, exposing me to two sets of fee’s.
The volatility is the biggest issue, along with the risk.
USD, or if it has to be crypto then USDT, for staking and payouts would be so so much better in my opinion as currently it feels like we as providers are taking on a lot of risk thats not needed.
Hi @toms91 - I have started with Numerai tournament about one year ago when $NMR went from about $25 down to $8 and possibility of floor at $1 was discussed here. So I got used to it and volatility is not bothering me. Just average performance of your models can bring you 50%+ annual return. More over if you decide to buy predictions at NumerBay, you can choose above average returns (currently model #1 is in fact purchased with 600%+ annual return). So this type of returns (possibly combined with buying $NMR for staking during dip) can easily compensate for volatility.
If you focus your attention to ML/#data-science and behaviour of stock markets you will get your reward - guarantied, even measured in $NMR. If you will be able to convert it to monetary value is still debatable.
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Seems a slightly strange way of looking at things to me.
Hardware sales or cloud providers don’t change their prices from dollars if you want to train large models so your fixed costs of participating are always the same while your payout moves all over the place. If you can ever sell the NMR at all.
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Actually I have $0 hardware/automation costs: in always free Oracle Cloud I have small flask server receiving webhooks and triggering swarm of Kaggle notebooks (max 10 concurrently running, each 4 CPU/30GB RAM) doing training and submitting.
That may explain my strange way of looking at Numerai. Additionally, I do not believe that size or method of model can give you superior performance (I would need some evidence to change my mind) because input data are extremely noisy. Also signal (if present) is ever changing. Simply put: it may be just a random walk down Wall Street.
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I feel the point is being missed here.
Take this example. You started staking models a month ago:
NMR Close Price April 8th 2023 = $19.13
NMR Price at time of writing = $14.76
Change -22.8%
Before even getting any payout at all its cost you 22.8% of your investment to supply a hedge fund with data. Data they can then use to make money with.
If it was based on a real major currancy, or a stable coin if we much use crypto, that volatility would be a fraction of the size and something you could actually develop on top of a base foundation of stability.
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No @toms91 your point is clear. The reason I started this topic is that there is risk that yours and everyone’s $NMR stake can go to zero value due to characteristics of crypto business. Some guys (@quantverse, @wigglemuse) are hearing here complaints about volatility quite regularly, complaint which I was not raising.
My main concern is disconnect in incentives of fund and prediction providers and risk asymmetry (we may lose everything, fund will own stocks portfolio).
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And its $ 13.55 (at time of typing this) - reckon any good models can recover it, pct wise. I stand corrected!
Isn’t it time to switch from NMR staking to staking in USD?
I believe all users would say yes , the problem is Numerai that has no incentives in switching to USD.
Actually @richai in very nice Bloomberg piece said:
“If we get to $1 billion in AUM we’re going to have no problem paying our users in any currency they want. Right now we like NMR, but in the future it could be any currency or payment.”
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Fingers crossed. But also fingers crossed they buy everyines NMR to convert it as the day that happens, NMR will be worthless 
In times like these, it’s good to resurrect this thread.
The users take risk when they buy NMRs, but what is Numerai’s risk? Numerai chooses the users’ payout/paycut and how the users’ NMR are burned. At the same time, Numerai owns the majority of the coins, so they have a lot to gain from the risk the users take on joining the tournament (users buy NMRs → NMR rise in value) without risking anything. At the same time Numerai is the one who makes the rules. Isn’t it a conflict of interest?
If they paid us in USD I wouldn’t mind so much paycuts and constant changes in the rules, because it’s their tournament after all and they have a hedge fund to run, but as things are with NMR I am pretty disappointed and worried.
If you have a better point of view, where a NMR based tournament is not unfair, would you mind sharing it with us? I would really like to have more faith in Numerai, the tournament and NMR, because It’s been a really interesting/rewarding experience so far and I would like to keep it going.
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