Author: Hubble AI
For market predictors, the biggest pain point is often not “not knowing”, but rather “being late”.
When we see breaking news, our instinctive reaction is usually to first verify:“Is this news genuine?” “Is it a rumor?”. This caution is a virtue in traditional investing, but in a binary options market like Polymarket, it can be an extremely costly hidden expense.
We call this cost the “confirmation tax”.
The PolyHub team reviewed 2,023 on-chain transaction data from Polymarket, trying to answer a quantitative question: How much Alpha (excess return) do you sacrifice to achieve 100% information certainty?
The data conclusion is harsher than we expected: in the most liquid breakout events, the first 10 minutes absorb 96% of the informational advantage. This means that when you spend 1 minute verifying the authenticity of the news, you have actually handed over most of the profits to those willing to take risks or who have faster information sources.
This article does not instill anxiety, but rather reconstructs the “golden entry window” for different types of news events by reviewing on-chain data from three typical markets.
The conclusions drawn are cruel and simple: In prediction markets, time is an exponential function of money. The later you enter, the smaller the remaining return space you can capture, and this decay rate often far exceeds most people's imagination.
1. Definition of Indicators: What is “Remaining Return Space”?
To quantify the cost of “late entry”, we use a simple indicator:
Remaining Return Space (Alpha) = 1 - Current Buy Price
For a contract that ultimately settles at $1 (YES):
At $0.20 entry, your remaining space is $0.80.
At $0.90 entry, your remaining space is only $0.10.
This is the money left on your table. Our research finds that over time, this amount does not decrease linearly, but rather evaporates exponentially.
2. On-chain Review: Three Types of “Decay Curves”
1. Breakout Certain Type: Can only “blindly charge”, cannot “confirm”
Case: Maduro arrested (Maduro out by Jan 31, 2026?)
Characteristic: Physical event + official instant confirmation.
On-chain data reconstruction:
0-1 minute (golden window): Within 60 seconds of the information shock, the average transaction price is only $0.56, meaning the remaining return space is as high as 0.44 (44%).
1-5 minutes: Just a few minutes later, a large amount of capital flows in, and the remaining space quickly drops to 0.12.
10 minutes later: The price stabilizes at $0.97, Alpha is exhausted.
Trading Insight: In this type of market, the half-life of Alpha is 2 minutes. If you try to wait for mainstream media's “in-depth reports” to confirm information, you are actually providing exit liquidity for those who entered in the first minute. Here the strategy is only one: Sacrifice certainty for entry position under the premise of controllable risk.
2. Game Correction Type: Instead of competing in speed, compete in “signals”
Case: SVB acquisition case (Will SVB be acquired?)
Characteristic: No single breaking news, composed of weekend negotiations, rumors, and market expectation adjustments.
On-chain data reconstruction:
First 6 hours (observation period): Despite already being Monday morning, the price remains at 0.61-0.64, the market is hesitating.
6-12 hours (confirmation period): The price rises in a stepwise manner, from 0.64 to 0.94.
Trading Insight: The decay in this type of market is “stepwise”. The golden window lasts up to 0-6 hours. At this time, speed is not needed; you need to look for “confirmation signals” that can change market consensus (such as rumors of negotiation breakdowns, large orders from Smart Money).
3. Priced Type: Buy and take over
Case: TikTok US ban (TikTok banned in the US)
Characteristic: The event has been highly anticipated for a long time, with huge market liquidity.
On-chain data reconstruction: Within 60 minutes before and after the ban officially took effect (T0), the price stabilizes around 0.84, with almost no Alpha generated.
Trading Insight: For highly anticipated institutional events, T0 is not the starting line, but rather the finish line. At this time, there is no informational advantage in entering, only the risk of “selling the fact”.
3. Practical Recommendations: Build your “Entry Decision Tree”
Based on the above data, we suggest that traders, when seeing news, should not rush to place an order, but spend 5 seconds judging the type of event, then match it with the corresponding strategy:
Conclusion
In prediction markets, 1 minute of hesitation does not correspond to the passage of time, but rather to a severe collapse of the risk-reward ratio.
Next time you face significant news, ask yourself a question:
“Am I entering now as a hunter to obtain Alpha, or as prey to provide liquidity?”
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