Numeraire

NMR is an Ethereum-based ERC-20 token used as a staking mechanism within the Numerai ecosystem. Its primary functions are:

• Staking on predictions: Data scientists submit predictions and stake NMR tokens to express their confidence in their model’s performance.

• Incentivising performance: Participants with accurate models on unseen data are rewarded in fiat currency and their NMR stakes are returned.

• Penalty for poor performance: If the predictions underperform, the staked NMR may be destroyed (burned), introducing an economic cost to overfitting or poor modelling.

The token is not used to pay fees or access the platform. Instead, it serves as a mechanism to reveal users' confidence in their models and to align incentives across participants. The staking process is governed by a Dutch auction system that adjusts rewards based on performance and relative confidence.