The New Numerai Economy


Just over a week ago, Numerai was paying out $14,700 per month to our data scientists. A few days ago, this number reached $9.8 million per month because of secondary market trading activity in our new crypto token Numeraire.

Since Numeraire is on Ethereum, data scientists could send it to any Ethereum address and any cryptocurrency exchange could trade in it, and some decided to. Numeraire was never sold by Numerai, and there was no “crowdsale” or “ICO”. Numeraire could only be earned by data scientists for competing in Numerai’s data science tournaments. Since all the Numeraire was held by smart people who had earned it, they demanded high prices to part with it.

On Bittrex, a cryptocurrency exchange, it reached a price of $168 per Numeraire and since we pay 58,812 Numeraire per month, our payouts per month reached almost $10 million. That is 10 Netflix Prizes per month, and it made Numerai by far the most high paying data science competition in the world ever.

Blockchain support
Clearly, the blockchain community believes in Numerai, and wants to see it work on a huge scale. They want Numerai to be the dominant hedge fund of the 21st century. They believe that Numeraire is the most important token in financial technology. And so do we.

And the support is merited as every part of our proposal for Numeraire is already working. Data scientists are staking their models with Numeraire, and models that are staked have better predictive power. Numeraire has led to huge growth in our community. Since the launch ten days ago, our users are up from 19,000 to 24,000 and our Slack grew from 3000 to 4400. Cryptocurrency traders are teaching data scientists about blockchain and Ethereum, and data scientists are teaching cryptocurrency traders about machine learning and Numerai. Everyone is aligned, and we are beginning to see strong network effects.

Cryptoeconomic stability
But an overnight 666-fold increase in payouts because of the release of Numeraire is not without downside.
The payout increase also incentivizes unaligned activity such as trying to decrypt our data to gain an edge, breaking our rules on multiple accounts, or even hacking our website. Success in these unaligned activities is now also rewarded significantly more, and we aren’t ready for this new threat model. Given the new stakes, we had to quickly add two-factor authentication (available in Settings).

Having a volatile price for Numeraire affects staking too. By staking Numeraire, data scientists are expressing confidence in their models because they risk losing it. Since the degree to which they care about losing it is correlated with the price, the efficacy of the staking mechanism actually improves with low, predictable volatility in the price of Numeraire.

Payout adjustments
Many data scientists use the payouts we give out as a way to determine how much time and computing power to spend building machine learning models on Numerai. We realize that setting and honoring expectations on this is extremely important. But in order to achieve stability and sustainability, we need to make adjustments.

We need to reduce the Numeraire payouts significantly. For the data scientists, it is a significant short term hit but it preserves the long term value of their Numeraire holdings and the Numeraire they will earn in the future.


  • Reduce NMR payouts ~90% to NMR 1510 per week
  • Increase staking payouts 3x to USD 3000 per week

These changes will apply immediately to the current Numerai tournament, and all unresolved tournaments as well including all stakes.

The goal for Numeraire has always been that it gets used to stake models. These changes encourage data scientists to hold Numeraire, and stake it even more than before. Even with this 90% reduction in Numeraire payouts, the prize pool is still more than 10x higher in USD terms than it was two weeks ago.

We will continue to iterate on payouts and incentives as we gain insight into Numeraire’s interaction effects, learn more about the staking outcomes, and listen to your feedback.

See the new payout schedule



Good move. Very good to see such a swift response to address the ‘unaligned activities’.



explain “unaligned activities”?



From the OP:

Although i agree with the action taken, the cyrpto enthusiaist in me does not because:

  1. The winner 2 weeks ago was allocated 4000 NMR vs this weeks winner will now get 160 NMR. A ratio of 56:1. A bit (majorly) unfair that you now have to win 56 weeks of the tournment to match someone that won only once.
  2. They shouldn’t move goal posts after the fact. The entrants in last weeks and this weeks tournments were entering based on a known payout. They just changed it after the fact. This is a big no no in crypto world. It is what caused the Ethereum (ETH) and Ethereum Classic (ETC) split - changing something - more or less (slighly different reasons there but basically the developers deciding to change something).

So who will want to invest in a token that can have the rules changed at any time?
This is not how crytpo works. How is the ETH contract written to allow for changes after the fact anyway?
Once NMR was released it was out of the hands of anyones control - or at least should have been.
This is not a play thing that Numerai can throw around.

Be interesting to see how this plays out…



I want to gently enter the discussion here because I’m on both sides of the thing as a machine learning engineer and a holder of NMR and I can see both sides of it. The primary purpose of NMR, as I understand it, is to improve the modeling quality overall and reduce the “Hail Mary” approach which will lead to higher volatility in the forecast and the returns.

If I upload a model with good forecasting quality I earn $ and NMR. If I want to earn more of both I can stake NMR against a level of confidence. But that doesn’t happen in a vacuum: my willingness to stake NMR is offset by the reward of higher earnings vs what I might lose if I’m wrong and it gets burned up. If I stake ten NMR in hopes of increasing my reward by $100, but I chance to lose $400, this is too asymmetrical. It makes more sense for me to either HODl the token or sell it in the open market. Both of those are unaligned actions. Without risking NMR there is no real downside to uploading crap models… They don’t want that. They NEED us to produce the highest quality possible models we can.

By reducing the payout, more of the NMR stays available for staking as there is less incentive to move it into the open market, the risk reward comes back into alignment. It also, reduce the downside pressure on the token. If payouts remain high, winners will only look to sell their NMR after each round. All selling with no buying will continue to force the token lower, none of us want that either.

The retroactive nature of the decision is unfortunate but I don’t see how it could have been done otherwise without tanking the value of the token. I’d much rather be sitting on what I have at $40 or so as opposed to $5 or 10.

They’re breaking new ground with this and some of it is going to have to be figured out as they go. We have to allow for, and be patient with, changes and mistakes and hope that when it’s all said and done they got it more right than wrong. We also have to keep in mind what the bigger picture is: everything the company is doing is a “Quest for Alpha”. There is a motivation to stabilize the price of NMR, and appreciation of the token in the open market is good, but it’s secondary to incentivizing the Data Scientists to upload good models. Which is why for me issue 2 is a non-issue…

People did indeed enter the competition with certain expectations, I was one of them. And, I witnessed what I was sure was an increase of the “board farming” that we’ve endured constantly from the beginning. The anonymous nature of this competition lends itself to exploitation. We’re asked to keep our accounts to three, but it’s difficult to enforce that. There is nothing stopping anyone from submitting a truckload of models and unfairly grabbing a large portion of the payout and then immediately moving their NMR to the open market.

This is unfair to other participants who adhere to the three model rule as our probability for payout drops and it further deflates the price of NMR. As a participant I’d much rather see Richard begin to implement things that immediately discourage that behavior and applying it retroactively is (to me) completely acceptable. From my perspective they moved the goal post closer in that regard, because (hopefully), the incentive for farming the payout and further depressing the tokens value has been reduced a little. I think more work is still needed there and I think they will continue to fine-tune it and make it work and I’m more than willing to endure some short-term heartburn on that end to improve the long-term viability of the project and my chances of succeeding within it.

If they wanted to completely incentivize data-scientists they could not only adjust their payout for accuracy and staking, but also how much of their NMR they’ve held on to (the percentage held vs their life-time allocation). This would encourage long-term, quality participation.- JP

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I have seen some discussions about :

  1. how the NMR is worth for NON Data Scientists (DS)?
  2. Payout structure is good or bad (cheap labour in crowdsource?)
  3. Value of Numerai vs NMR.

I think there is a gap between NMR holders and company Numerai.

Suggestion: Numerai should create a incentive (or channel) to people invest in the company Numerai using NMR.


For example:

  1. Minimum amount to invest in the Hedge Fund Numerai (AUM): 25.000 NMR (and/or item 2)

[[ Hold at least 25.000 NMR would be the qualification for the “qualified investor” to be able to invest in the Hedge Fund. Numerai won’t trade with this 25.000 NMR.

So, If the “qualified investor” hold 25.000 NMR, he could invest a minimum of USD 1 million in the Hedge Fund Numerai (values are just example) ]] (edited)

  1. Minimum amount to invest in Shares of Numerai: 100.000 NMR.

In this way:

  1. Creates a channel to big investors to invest in the company Numerai
  2. Big investor MUST buy NMR, so the NMR value will increase in the market and consequently increase the payout for DS. This will bring new DS for the tournament.
  3. Generates long-term incentive to DS hold NMR and exchange for shares of the Numerai.
  4. Numerai can put the NMR (from Shares sold) back to the market as payout, for example.


The are accepting institutional investors . Investors buying 25,000 and giving it back to numerai …does not give the Hedgefund any money to actually trade on stock markets.



25.000 NMR would be the qualification for the “qualified investor” to be able to invest in the Hedge Fund.

So, If the investor has 25.000 NMR, he can invest a minimum of USD 1 million in the Hedge Fund Numerai (values are just example).



So if 25000 NMR suddenly becomes 1M $ , an investor will have to put up 2M$ to get 1M$ worth of investment ? Even if they get a 100% return they get nothing at all .

You do understand you sound very absurd right?



As I said, the values are just EXAMPLE. Think about the CONCEPT.



I’m not a lawyer, but I suspect that allowing any kind of investment in the hedge fund using NMR would probably violate investment laws in place in the US, or at the very least invite intense inspection by the SEC.



Hi there,

First I’d like to say I enjoy your posts and agree with 90% of what you say. I consider you a reasoned and well thought out person.

In this instance you say you’re on both sides. The point I have tried to make in some post somewhere on here is that it is not both sides, but rather there is the investor side as well (that seems to be forgotten with all the people on here now having $$ signs in their eyes).

As an NMR holder; have you bought any NMR or do you only hold what was allocated to you from Numerai? If you haven’t bought NMR, do you ever see yourself handing over your hard earned fiat and buying NMR at $50, $100, $800 each (assuming no further changes to how it all works)? If you could place yourself in the position of a parent who has a child come to them and say ‘dad, I’ve decided not to use my college fund to go to college, I am going to invest in this token called NMR’, what would you say to them? (focusing on the value of NMR as an investment, not considering any arguments around value of an education or investment diversification issues etc etc).

)[quote=“ObjecScience, post:5, topic:347”]
The primary purpose of NMR, as I understand it, is to improve the modeling quality overall…

NMR cannot improve the modeling quality overall, it can only give people a financial incentive to improve their modeling quality overall…in the hope they earn NMR which they sell in the marketplace for $$. Increasing the weekly payouts of the tournaments could have achieved this as well - but that would have meant Numerai putting their hand in their own pocket (and fund investors pockets) and coughing up the increase in prize money. Why do that when we can jump on board the current crypto craze and invent our own coin - we won’t sell it in an ICO, or attach it to the value of Numerai - or …
-> So then where does the financial value of NMR come from? What is the economic (non-speculative, non-manipulation) benefit that would make an investor want to buy NMR?

I do not ever see data scientists paying $00’s to buy NMR so they can stake it. Millions of NMR out there to stake for a $3,000 a week prize pool.

Numerai created NMR out of thin air, attached no value to it, handed it out to data scientists who now have a windfall gain by dumping it on Bittrex to pump and dumpers and unsuspecting innocent people who have mistakenly believed that NMR is somehow tied to the fortunes of the Numerai hedge fund. Just like people do not understand that BTC does not equal blockchain, or that XRP does not equal Ripple.

The only people that got the initial distribution of NMR was Numerai and data scientists - if there is value in it, there wouldn’t be 10’s thousands of NMR up for sale - other than for people looking to lock in their windfall.

When you get people posting on here suggesting that NMR should be tied in to Numerai to give it value, and others saying that would raise SEC implications or at the very least invite intense inspection … as if intense inspection was a bad thing -> really goes to show that people are happy taking their free $$'s and not caring one bit about the end result to whomever NMR gets dumped on and are left bag holding. When did we go so underground.

My background is business management and healthcare research in a hospital environment. Our focus is finding better outcomes for patients; can we predict heart attacks; how can we enhance the ICU. I guess bringing morals into a place focused on betting on stock price, finding an edge to make more money is the wrong place for me.



So … if you ever read the value proposition … When Numerai , the Hedge Fund begins to manage 1 billion $s , they will pay out 1million$ in Dollars … the only way to earn them? is staking Numerai. 3000$ is not a set limit … You argument about child and dad blah blah with some emotional mumbo jumbo has no place in the brutal investment game



Point proven…

Good luck to you risinhigher - I hope become the most brutal of them all.



I’m about to moonwalk out of this thread, and probably the forum for a while as it’s just turning into a shit show. I’m curious to know @GreatConcept, why are you here, what is your purpose. You don’t appear to be one of the DS’ and you’ve stated that you don’t own and wouldn’t own NMR. So what is it exactly you want to accomplish here?



how can i stake my numerai ? can i use to stake myethwallet? thanks



When you upload a model you have the option to stake NMR at that time. You can use NMR that you’ve won in previous rounds or you have an option to stake from a wallet.



I’ve said I’ve never bought NMR, not that i don’t own or wouldn’t own. I doubt you’ve bought NMR. I doubt any DS will ever buy it. That has been my point - once NMR listed for trade at a ridiculous high price and then madly pumped and dumped to $200, i saw that it was going to mean trouble for the humble tournaments i enjoyed dabbling in. I realised this and in my other post stated that this place was not for me any longer. A wave of participants will arrive seeking ways to maximize how much NMR they can secure. The prize now is NMR, no longer data science or robust algorithms.

At current price, NMR will be coveted, but not as a tournament staking mechanism. Talk of people hodling until price of $800. How insane is that. 21 million NMR X $800 = ~$1.6B. 52 tournaments a year which were paying out a mere $1000 each. Ratio’s of 30,000:1 value. And everyone here doing quick calc’s in their head seeing how much free money they just got. The greed sickened me. That ‘free’ money has to come from somewhere, from investors jumping on board with a misunderstanding of what they were buying - that is all i was pointing out. It was not obviously clear to people hence the questions coming in ‘was NMR token tied to company prosperity’.

The company acted by reducing NMR payouts, but that’s lost the trust of some participants. Changing rules on the fly.

I’m not sure if I’ll hang around, or whether i should, but the curiosity in me may win out. It’s now a study of people behavior and greed.



Why place the token on the blockchain in the first place if volatile price for Numeraire is undesirable? Does this staking mechanism really need decentralization? Especially since it was intended to be used only by DS participating in Numerai challenges, and since it holds no real value for any other purpose.

If the real incentive behind the release of Numeraire was to increase the quality of submitted models, then creating a centralized “token” – just a number that can be used for staking, that is tied to a user account on the website – would work better, in my opinion.

There are so many projects lately that don’t really need a decentralized token, but release it regardless…

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It’s called free money, why miss out if it’s available.

A great example is UET. The guy behind it knows the deal. Quick read at

I’ve accepted to just play along with the game and not to try and point out the ridiculousness of it all.