Numerai is opening its Erasure protocol to the world.
Erasure is a smart contract on Ethereum for people to share information and to express confidence about that information by putting money behind it. So far, Erasure has only been used by Numerai itself to buy predictions for its hedge fund. Now the startup has created Erasure Bay, a marketplace for information, launching today.
The internet has been amazing as a place to post and share information, but ensuring the veracity of that information has proven tricky. Crypto keeps taking stabs at addressing this and the latest attempt comes from Numerai, a startup backed by Union Square Ventures.
"Erasure Bay is a place to request information and to tell information, and to trust the person you are doing the business with. To trust a counterparty in a way that you haven't been able to trust people before," Numerai’s Jonathan Sidego told CoinDesk.
How it works
Erasure Bay is a two-way marketplace. Users can either post requests for information ("I want to know who Satoshi really is") or post information they have for sale ("I know who Satoshi really is.")
Of course, anyone could do this anywhere, the problem is how do you know you can be confident in the information? The Erasure protocol has a solution for this that may not be guaranteed, but it would definitely increase confidence.
The secret to having confidence in information purchased on Erasure Bay is a built-in process called "griefing." In short, griefing is a way both for the seller to express confidence in their information and for the buyer to inflict pain on the seller if they aren't satisfied.
"The blockchain has only proven useful for one thing so far and that's proving one person has some amount of money," Sidego said. Erasure Bay proves someone has money they will back their information with. "It's a simple way of putting skin in the game without a middle man."
The stakes are ultimately in NMR, but users will post them in dai, the stablecoin whose value is pegged to the U.S. dollar. When griefing occurs, the dai is converted to NMR so the dai doesn’t get destroyed.
Numerai isn't taking a cut or charging for sales on Erasure Bay. The only way it would benefit directly from the new product is from gradual reductions in the NMR supply, boosting its value.
Building a network
Of course, a marketplace like this is only as good as the participants in it, so the company needs to get eyeballs on the protocol.
To drive attention to it, Numerai is linking everything that happens on Erasure Bay to a Twitter account that will post all new offers and also griefing incidents.
Looking down the road, accounts that use Erasure Bay frequently will start to develop a reputation. Reputation scoring won't be live early on, Sidego said, but the feature is planned for later. Reputation will be one more factor for signaling trust in the information on offer.
The team expects early users to post bounties for leads for hiring candidates. That seems like the most obvious place to start, but other markets could soon develop. People could post bounties for leaks from software or film studios, for example.
"There's a whole bunch of places where people just setting down money would change everything," Sidego said.
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