In the information age, a famous quote that states “knowledge is power” has never made more sense. A common side effect of the internet is the existence of a vast quantity of inaccurate or fake data. People will think better before publishing inaccurate data if they have something to lose in the process, and that is the vision of this project called Erasure Protocol.
Erasure brings a new service to offer stock-trading data in a completely decentralized way.
HOW DOES IT WORK:
Erasure is a decentralized marketplace for stock-trading data, all built on top of Ethereum and IPFS.
The effort was made by Numerai, which is a well-known hedge fund that trades equities based on an aggregation of thousands of predictions made by a worldwide network of data scientists competing between themselves.
The protocol is meant to enable anyone who wants to make market predictions and stake on them, building a verifiable track record. Users stake on market predictions using Erasures native token, NMR (Numeraire), an ERC20 cryptocurrency.
The platform also hosts other highly valuable DApps like ErasureBay and Quant.
ErasureBay is a marketplace for sourcing any kind of info, where users can request for information like predictions, secrets, whistleblowers, advice and require that fulfillers place a stake.
Quant is a stock-picking tournament, which uses Erasure to timestamp stock picks. All predictions are staked and are burned according to their accuracy. Reward prizes are paid accordingly to the stake.
UNDERSTANDING THE PROCESS:
Erasure is more than just another protocol build on Ethereum because it is the first platform that came out to solve a problem called “trapped information”.
Trapped information can be defined as valuable market data that is never used to its full potential.
But why? Because of the quality of the information available, there cannot be verified. This results in a dead-end for this valuable info, which is not good at all.
Erasure and Quant may be the definitive solution for that problem, as they work by building verifiable track-records for people with unique market insights.
DIG INTO IT:
The platform is a well-designed solution that uses Quant on the top of the Erasure protocol itself to allow users to fulfill several different purposes.
Users can encrypt and upload their own stock market predictions directly to IPFS, then timestamp it by saving the IPFS file hash in Ethereum.
Once their market predictions are revealed, users score predictions against market data, which results will reflect in their respective reputation scores inside the platform.
Quality of predictions is also a big concern for developers, so the protocol created ways to leverage the NMR token for staking on predictions, hence improving incentives for only high-quality data.
It does limit the amount of stock-predictions data (preventing spam and decreasing cases of “pure lucky” predictions, as well) and provides a reliable mechanism through which data buyers can resort to inaccurate data sellers.
There is also the “griefing factor”, that it is a product of the mechanism we have talked about before. The mechanism works as the buyer destroy tokens stake by an inaccurate seller, hence destroying some of his own. It generates the so-called griefing factor, a ratio that evaluates how much was destroyed on each side.
The bigger the griefing factor gets, the more confidence in a stock market prediction feed will get. It happens because a seller is putting a lot more of their stake at risk.
WHO IS BEHIND THE IDEA?
The Erasure Protocol is a product of Numerai, a hedge fund located in California. Numerai was founded back in 2015 by Richard Craib, a South African technologist that was among individuals listed in the 2017 Forbes 30 under 30.
The company started its first funding round in 2016, raising $1.5million. Later in the same year, they also had another funding round, that time raising $6million.
The main idea of the whole project was always to crowdsource information using encrypted data sets, using scientists worldwide.
These scientists were originally awarded Bitcoin for their efforts via competition, but later Numerai started to use its native token NMR to incentivize higher-quality predictions.
More important than simply have access to information, is to have access to accurate information. Erasure is a decentralized marketplace for stock-trading data that want to solve the problem of bad information online.
As people involved take risks of losing something if the information is inaccurate or fake, it automatically increases the data’s quality standard, which turns out to be good for everybody, whether users, data sellers, and the ecosystem itself.