The true cost of being one minute late in the prediction market — A study on the golden entry windows for different events

MarsBitNews · 2026-02-14T05:34:55+00:00

In prediction markets, hesitation in confirming the authenticity of news can lead traders to miss profit opportunities, known as the "confirmation tax." Studies show that 96% of informational advantage is absorbed within the first 10 minutes of a sudden event. The later the timing, the rapidly diminishing remaining profit potential. Therefore, traders need to quickly assess the type of event and develop appropriate strategies to maximize gains.

MarsBitNews

2026-02-14 05:34:55

Abstract generation in progress

Author: Hubble AI

For traders predicting markets, the biggest pain point is often not “not knowing,” but “being late.”

When we see breaking news, our instinctive reaction is usually to verify: “Is this information genuine?” “Is it just a rumor?” This caution is a virtue in traditional investing, but in markets like Polymarket’s binary options, it can be an extremely costly hidden expense.

We call this cost the “confirmation tax.”

The PolyHub team analyzed 2,023 on-chain individual transaction data on Polymarket, attempting to answer a quantitative question: How much Alpha (excess returns) do you sacrifice to achieve 100% informational certainty?

The data reveals a harsher reality than we expected: in the most liquid breaking events, 96% of the informational advantage is absorbed within the first 10 minutes. This means that when you spend one minute verifying the news’ authenticity, you’ve already handed over the vast majority of potential profits to opponents willing to take risks or with faster information sources.

This article does not induce anxiety. Instead, by reviewing on-chain data from three typical markets, it restores the “golden entry window” for different types of news events.

The conclusion is brutal yet simple: in prediction markets, time is an exponential function of money. The later you enter, the smaller the remaining profit space you can capture, and this decay often far exceeds most people’s expectations.

Defining the Metric: What is “Remaining Profit Space”?

To quantify the cost of “late entry,” we use a simple metric:

Remaining Profit Space (Alpha) = 1 - current buy-in price

For a contract that ultimately settles at $1 (YES):

Entering at $0.20, your remaining space is $0.80.

Entering at $0.90, your remaining space is only $0.10.

This is the money still on the table. Our research shows that, over time, this money doesn’t decrease linearly but evaporates exponentially.

On-Chain Review: Three Different “Decay Curves”
Deterministic Breakout: Can only “blindly rush,” not “confirm”

Case: Maduro out by Jan 31, 2026?

Features: Physical event + instant official confirmation.

On-chain data reconstruction:

0-1 minutes (golden window): Within 60 seconds after the information shock, the average transaction price was only $0.56, meaning the remaining profit space was as high as $0.44 (44%).

1-5 minutes: Just a few minutes later, a large influx of funds causes the remaining space to rapidly drop to $0.12.

After 10 minutes: Price stabilizes at $0.97, and Alpha is exhausted.

Trading insight: In such markets, the half-life of Alpha is less than 2 minutes. If you wait for mainstream media’s “in-depth report” to confirm the information, you are essentially providing liquidity for those who entered within the first minute. The only strategy here is: under manageable risk, sacrifice certainty to secure an entry position.

Game-Adjusted Type: Better to signal than to race

Case: SVB acquisition? (Will SVB be acquired?)

Features: No single breaking news; market adjustments driven by weekend negotiations, rumors, and expectations.

On-chain data reconstruction:

Prior 6 hours (observation period): Despite it being Monday morning, prices remain between 0.61-0.64, indicating market hesitation.

6-12 hours (confirmation period): Prices jump in steps from 0.64 to 0.94.

Trading insight: The decay in such markets is “stepwise.” The golden window lasts 0-6 hours. No need to race; instead, look for “confirmation signals” that can change market consensus (such as rumors of negotiation breakdown or large buy orders from smart money).

Priced-In Type: Buy-in equals taking over

Case: TikTok ban in the US

Features: The event has been highly anticipated for a long time, with huge market liquidity.

On-chain data reconstruction: In the 60 minutes before and after the official ban (T0), prices remain around 0.84, with almost no Alpha generated.

Trading insight: For highly anticipated institutional events, T0 is not the starting line but the finish line. Entering at this point offers no informational advantage and only the risk of “selling the fact.”

Practical Advice: Build Your “Entry Decision Tree”

Based on the above data, we recommend traders not to rush into placing orders upon seeing news. Instead, spend 5 seconds assessing the event type and then match the corresponding strategy:

Conclusion

In prediction markets, a one-minute hesitation doesn’t mean just losing time—it causes the risk-reward ratio to collapse sharply.

Next time you face major news, ask yourself:

“Am I entering now as a hunter seeking Alpha, or as prey providing liquidity?”

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.