Unless it changes, it will.
Some users has posted that if their payout return goes below 100% a year, they will quit Numerai. I understand them. If new users stake at most $4000, they will make $4000 a year. Is that a proper reward for a qualified worker? I agree that it is not a full time job, but it takes many hours to improve models continuosly, read the forum regularly to be aware of anouncements and new rules, update your scripts to new tournament data formats, new validation sets, new targets, etc.
Why in two years time?
At current NMR prices, total staked amount growth comes mainly from Numerai payouts which, with current cap of 300K NMRs staked and 3.3% average weekly payout, is around 500K NMRs a year. In two years total stakes will be 1.5 millions NMRs and payout factor will sink to 0.2, sending average returns for good models very close to 100% yearly return.
Meanwhile the CoE is trying to accelerate this process. Maybe it is a good solution because the sooner the end, the sooner a new business model will arise.
Unless it changes, it will.
Yes, all of this has to be in service of eventually attracting more AUM for the underlying hedge fund which would lead to higher staking caps on our side, and help ensure the ultimate survival of the fund. It seems like that process can only be “fast-tracked” to a very limited extent, so just on-boarding as many data scientist users as fast as possible could well just be accelerating the process of making the tournament/signals less and less attractive, even to the best users. But maybe that makes the token go up & up & up. So then no one will care about the tournament and just want to hold the token? Then it does become kinda ponzi-ish. So many dynamics, hard to say what will actually happen.
Asset prices are based on expectations. Why would anybody buy NMR token, which is usefull only to stake in the tournament, if the tournament is expected to be less and less attractive?
Because the reason it would be less and less attractive is because there is so much staked on it, causing the payout factor to be low. Lots of staking causes token go up, but payout factor going down might make people bail – where’s the equilibrium point? Like I said, lots of dynamics. I’m not making predictions, just wondering out loud…
Numerai will need to buy NMR to pay for the data scientist, once they run out of minted NMRs.
I think many of those who have stated they will withdraw if their earnings fall under 100% /yr will re-evaluate at that time and decide that being deep in double-digit % returns is still very good (incomparable to anything as far as I can tell), and some will leave, but not as many as claim they will.
In two years will be over for sure. Does this hedge fund behind Numerai really exists? I don’t think so. We are miners of numerai in a new type of mining: proof of correlation. Nobody buys NMR, only us. Some day this game will end.
If the hedge fund doesn’t really exist, then yes this will be over.
Then again, this company did in fact raise 7.5 million dollars in 2016. And the returns are real. And this is not a job… its a side hobby of intense, complicated, and complex work . Open source hedge fund is something futuristic. Literal pioneers in crypto. This crypto product is attractive to us because it’s how we see returns on the work we do. Even if the crypto coin gets rocked, that’s like being bearish because stock markets are getting rocked. Everything is a cycle.
I’d love to have more transparency with the founders and managers of this system though.
Well, they registered something or other with the SEC.
Yes, If your time is worth nothing, your return will be in double-digit.
But, If your time is worth a lot, your return will be negative.
sorry, I don’t quite understand your reply.
Not that I agree with alfa137, but I think he means if your time is highly valuable (i.e. you can earn much more doing something else), your effective return by working on Numerai would be negative.
If we imagine numerai as a casino, we have just like a casino chips you can buy to participate in the fun. The only problem comes the day where you cash out - the casino guarantees the chips value by having reserve cash, but here numerai has nothing in reserve - you cannot cash out. The current idea apparently is: “go sell it on the marked dunno I don’t care”
But you get your casino chips from the casino in the first place, so that’s where you cash them. We get NMR on the market, and then cash it back on the same market. Maybe don’t think of it as a casino because it isn’t like that. A casino wins when you lose – Numerai loses when you lose and only wins when you win also.
I see people leaving when they can get better returns elsewhere. That is the investor way. However, there is one thing not being considered in this post. Education. How much is it worth to learn from this contest? I see myself learning here until I know enough and have enough money to try it on the live market with my own money. I would see that as a graduation of sorts from this tournament. However, anyone looking for any excuse to bail will find one in a complex tournament like this. Just don’t forget to include the value of on the job training you get when calculating your returns here. I haven’t run simulations on real live data, yet, so i don’t know if I could get better returns doing the same things on my own. In any case, people might stay here for nostalgic reasons. People do things for various reasons that don’t always make sense.
IMHO supply vs demand applies to the reward. If they start to lose people they have to respond.