Thinking about bounding the value of NMR (Numeraire) from Numer.ai

Recently, there are quite a bit of noise about the value of NMR (Numeraire) because the currency has been listed on cryptocurrency exchanges. Before the listing, NMR is essentially a game token that Numer.ai gives to participants to play a betting game (https://numer.ai/whitepaper.pdf). Given that the NMR was not convertible pre-listing, the NMR is very similar to an arcade game token. Recall your personal experience with game tokens -- its value is essentially the expected value of the winnings you make from playing the game.

With the analogy in mind, the lower bound on the value of the NMR would be the expected value of the betting game. This is the lower bound because post-listing, NMR might be demanded at a higher value at exchanges. But should the exchange price ever falls below a certain point, then the game participant can buy these low value NMR for use in the betting game. As of the beginning of July, the maximum winning is $3000 (https://forum.numer.ai/t/the-new-numerai-economy/347).

The betting game is a bit complicated, and so this expected valuation is difficult to calculation. Here, I will to point out a few things to help everyone think about how best to think about the lower bound value of the NMR. From reading postings online, a lot of people are not clear on factors that would impact the NMR valuation.

The key rules to the betting game (https://numer.ai/rules) are:

1.     You have to participate in the forecasting game to participate in the better game.
2.     You have to forecast better than random (-ln(50%)) in order to be eligible to the betting pool.
3.     For example, as of July 8, 3am, Pacific Time, there are 21 participant in the betting game with a median confidence of 0.0655.
4.     Your payout to the betting game, if you are eligible to the pool, is determined by 1) the amount of NMR you bet divided by confidence, and 2) the winnings of the other betters with higher confidence than you.  Confidence is a number you set when you enter the better game.

So if you bet 10NMR with a confidence of 0.0655, you can win up to 10/0.0655=$152.67 under the following conditions:

1.     Your submitted forecast needs to perform better than random guessing.
2.     After accounting for the winnings of all the other betters with higher confidence than you, there are still at least $152.67 left in the pool.
3.     In this example, the value of the 10NMR to a better who expects to be eligible 100% is 152.67/10=$15.267 per NMR.

In addition to the lower bound being depending on the expected earning from participanting in the game, some factors that would further improve the value of NMR would be:

1.     The betting pool is expected to increase
2.     The NMR, for whatever reason, is expected to become a mainstream currency.
3.     The hedge fund that creates and supplies the NMR eventually compensate the holder of NMR in some way.

Item 1 has already happened as the betting pool 2 weeks ago was at $1000. How likely you think item 2 and 3 will happen is up to you.