Discovering What Moves The Market: A Numerai x Ocean Partnership
In the ever-evolving world of cryptocurrencies, one essential aspect remains constant: the quest for understanding the factors that drive market movements.
It’s been over 200 years since the inception of the NYSE. Since then, there have been exponential advancements in stock trading strategies culminating in the creation of Numerai:
Analogous events in crypto markets have happened in just 16 years:
Notice anything missing from the development of crypto markets?
There has yet to be a groundbreaking research paper on Crypto Factor Models. It is possible that simple, well-known factors like size or momentum work well due to the immaturity of crypto markets, but the question remains: is there a universally accepted multi-factor model for the cryptocurrency market?
No.
Which is why Numerai, for the first time in its history, and Ocean Protocol have partnered together to ask and answer this difficult question in the best way possible — by launching a crowdsourced research competition to discover crypto factor models.
Submit your research here.
A Remarkable Pairing: Numerai and Ocean
Ocean Protocol’s Predictoor and Data Challenge products are promising competition formats for crowdsourcing knowledge about crypto markets. They synergize with Numerai Crypto to provide accurate crypto insights not only in the form of raw predictivity, but also explanatory research.
This first challenge represents the beginning of a mutually beneficial relationship with another promising prediction project in the cryptocurrency space. Through collaboration, data scientists from both communities will be able to learn about crypto factor models together, thereby broadening our collective understanding of crypto markets and enhancing the reliability of our competitions.
In the future, we plan to work together to generate open datasets, find overlaps between time-series price prediction and cross-sectional ranked returns, and undertake further research endeavors in the field of crypto markets. This partnership holds tremendous potential for advancing our understanding of cryptocurrency dynamics and enhancing the predictive power of our models.
The Synergy
When we launched Numerai Crypto last month, we considered doing crypto factor research ourselves, but concluded that the crypto landscape was so broad and understudied, that we would need an army of data scientists to complete the research on time. This is where the Data Challenge can help.
Numerai has nearly a decade of experience developing an equity market neutral hedge fund requiring deep knowledge of stock market factors and how to use them during portfolio construction. By crowdsourcing the research, this expertise can be leveraged to uncover truly groundbreaking discoveries in the crypto market factor space.
When the competition closes on August 27th, Numerai and Ocean will collaborate to judge and score the submissions, focussing on the quality of writing, analytical rigor, and significance of results. We expect the quality of writing to be on-par with academic standards and analytical rigor to be unquestionable. The significance of results includes how much the chosen/discovered factors explain price variance in the market, how well factor portfolios perform, and methods of risk evaluation using the factors presented.
As part of the competition and announcement of the winners, the research papers will be made publicly available. With the release of these factor models, we expect the Numerai Crypto Meta Model to become significantly more predictive because of the power of our data scientists. In the long run, Numerai plans to develop and open-source datasets built using these factor models.
We are eager to see the impact of this research on our community and the broader crypto landscape. Perhaps the wider crypto community may discover how to perform factor investing, or maybe crypto quant hedge funds will use the research to inform more sophisticated strategies. As these models become public, the rapid advancement of technology is likely to bring about unforeseen innovations that will propel the industry forward.
Join The Crypto Factor Modeling Data Challenge
This challenge offers a unique opportunity for data scientists to apply their skills to a real-world scenario and contribute to the advancement of knowledge in the cryptocurrency market. The top 10 research papers will receive awards from our $20,000 prize pool.
Participate in this groundbreaking competition today:
- Create a Desights Profile if you don’t already have one.
- Craft a crypto dataset and discover crypto factor models.
- Submit your report on the Desights platform.
- Create a Numerai Account.
- Submit your report to the Numerai Data Science Forum.
- Wait for scoring and top 10 announcements.
Read more about the challenge on the Ocean Protocol Blog.
