More importantly, prediction markets form a stark contrast with the Memecoin ecosystem: 85% of Polymarket traders incur losses, but their downside risk is defined and controllable; meanwhile, although the Pump.fun platform generates 10,417 tokens per day, 98.6% are identified as manipulative projects ( https://chainplay.gg/blog/lifespan-pump-fun-memecoins-analysis/), with an average lifespan of less than three months. For traders with $100 initial capital, prediction markets offer structured opportunities based on information arbitrage, while Memecoin trading resembles casino slot machines—relying on luck and timing.
Looking ahead, attention assets are becoming the third major asset class, following cash flow assets and supply-demand assets. By reconstructing prediction markets as “attention oracles,” they can support Attention Perpetuals (Attention Perps), allowing traders to gain direct financial exposure to cultural attention. This innovation not only resolves the limitations of traditional UGAs that must start from zero, but also provides two-way trading capabilities for already high-attention topics (such as sports stars or political figures). In this transformation, platforms like Limitless—focused on Pre-TGE hedging—are providing innovative solutions for key structural gaps in the crypto ecosystem.
HTX Research spokesperson stated, “Prediction markets could evolve from speculative curiosities into reliable macro signals for institutional decision-making. Risk management is a key consideration. We expect to see adoption initially focused on markets related to financial products which firms are able to model and analyse. ”
Core Analysis
The $100 Capital Game: Strategic Divergence Between Prediction Markets vs. Memecoins
In the realm of small-capital investing, prediction markets and Memecoin trading represent two fundamentally different risk-management philosophies. This divergence is reflected not only in return expectations but also in profoundly different understandings of market efficiency and the value of information.
Information Arbitrage in Prediction Markets
With an initial capital of $100, prediction markets provide a structured investment approach based on information asymmetry. On the Polymarket platform, a minimum of $10 allows participation, and investors can diversify across 5–10 events, optimizing bet sizing to achieve risk management. The core advantage of this model lies in its defined risk exposure: while traders may lose the entire investment on a single contract, they understand the odds and event criteria from the beginning.
More importantly, the price discovery mechanism in prediction markets offers small-capital traders unique opportunities for information arbitrage. Market odds reflect the aggregate information of all participants, but low-volume markets may lack sufficient contributors to achieve real efficiency—creating an advantage for small-capital traders with expertise. For example, deep knowledge of local elections, specific technological developments, niche legal cases, or match outcomes can be converted into quantifiable investment returns.
The FOMO-Driven Mechanism of Memecoins
By contrast, Memecoin trading on the Pump.fun platform exhibits entirely different risk characteristics. The cost to create a Memecoin is around 0.02 SOL (approximately $3–4 at current prices), and initial trading typically occurs at a market cap of around $4,000, enabling $50–$100 to secure a significant early share. But this apparent accessibility masks a harsh reality: according to a report by Solidus Labs, among the 7 million tokens launched on Pump.fun, 98.6% are identified as “rug pull” or manipulative projects ( soliduslabs).
More critically, the information asymmetry in Memecoins is typically disadvantageous for ordinary traders. Creators possess full information and have numerous tools to manipulate trading, including controlling the initial marketing push, relying on influencers, and using social media strategies to generate FOMO. In this market, the most powerful “information” is the viral propagation potential of cryptocurrencies, but such information is fleeting, and 97% of traders earn less than $1,000 in profit.
The Scaling Dilemma and Solution Paths of Prediction Markets
Although prediction markets achieved a trading volume of $27.9 billion in 2025, their growth relies heavily on subsidy models. Polymarket invested around $10 million in market-making incentives, at peak times paying more than $50,000 per day to maintain order book liquidity; today, these incentives have dropped to only $0.025 per $100 traded. Kalshi has spent more than $9 million on similar programs, yet none of these are sustainable solutions.
The fundamental cause of the liquidity paradox lies in the structural characteristics of prediction markets. Unlike regular cryptocurrency liquidity pools, prediction market contracts expire worthless upon a negative outcome , with no rebalancing mechanism or salvage value. Worse still, as markets approach settlement and outcomes become clear, informed traders buy the winning side from market makers at favorable prices, while market makers continue to price based on outdated probabilities. This “toxic order flow” continuously causes market makers to lose money, resulting in 85% of Polymarket traders having negative account balances.
A new generation of entrepreneurs is tackling this pain point directly through technological innovation. Melee Markets applies bonding curves to prediction markets, giving each outcome its own curve, allowing early participants to obtain better prices without requiring professional market makers. XO Market requires creators to provide liquidity using an LS-LMSR AMM, with market depth increasing as capital flows in. While these innovations cannot fully solve the liquidity problem, they offer new possibilities for decentralized platforms.
Attention Assets: The Evolution from Memecoins to Financial Infrastructure
The crypto space is giving rise to an entirely new asset class—assets whose value is based on attention. Traditional assets can be broadly categorized into two types: cash flow assets (stocks and bonds) and supply-demand assets (commodities and foreign exchange), but attention assets serve as “Schelling points” of cultural attention, with their prices directly reflecting fluctuations in attention.
Current attention assets are primarily user-generated assets (UGAs), such as NFTs, creator tokens, and Memecoins. From a cultural perspective, Memecoins are interesting, but from a financial perspective, they have significant shortcomings. Efficient attention assets should allow market participants to gain direct financial exposure to the attention of a given subject, incentivizing participants to trade assets they believe are mispriced, enabling the market to form prices that reflect collective predictions of attention.
A key characteristic of UGAs is that their valuations typically launch at zero. This is not a flaw but a feature, because the attention of a newly created meme is indeed zero at birth. However, this also means that UGAs are not suitable for providing financial exposure to subjects that already possess substantial attention. Using LeBron James as an example, although one can create meme tokens related to him, many tokens with the same name already exist in the market, and new tokens start at a price close to zero, making it impossible to reflect his true attention level as a globally renowned figure.
Attention Oracles: An Innovative Architecture Based on Prediction Markets
The next development direction for attention assets is Attention Perpetuals (Attention Perps), enabling traders to go long or short on cultural attention. Such financial instruments require two-way trading capability, must connect to real-world attention data sources, and should not start from zero—they must instead possess an initial value that reflects existing attention.
The core innovation of the attention oracle lies in using binary prediction markets surrounding a certain topic as inputs, and constructing a weighted aggregated index based on their price, liquidity, and time dimensions, aimed at capturing changes in attention. Taking LeBron James as an example, multiple related binary prediction markets can be created:
“Will LeBron James have more than X million followers before the end of the month?”
“Will LeBron James win the championship in 2026?”
“Will LeBron James win the MVP in 2026?”
The index price is calculated by aggregating and weighting each market’s price, liquidity, resolution time, and importance. The main advantage of this prediction-market-based oracle structure is that manipulation carries real cost. If a trader goes long on LeBron’s attention and wants to push the price upward, they must buy positions in the underlying binary prediction markets, which means purchasing positions at prices the market considers overvalued.
Social Media and Viral Propagation: The Rise of New Participant Roles
One of the important features of prediction market development in 2024–2025 is viral propagation driven by social media. The key behavioral mechanism is posting screenshots when prediction contracts become topical, thereby attracting attention and bringing liquidity to the contracts. These “probability-over-time” charts have a unique appeal because they tell compelling stories: contrasts between initial expectations and what actually occurred.
A new type of market participant—ordinary social media users—is becoming an important part of the prediction market ecosystem. By posting new meme formats in the form of prediction-path screenshots, they provide organic marketing and traffic-acquisition mechanisms for prediction markets. For example, the Kalshi contract “Will Taylor Swift and Travis Kelce get married in 2025?” saw not only a surge in odds when the engagement was announced but also a significant increase in liquidity due to rising social media attention.
This trend forms an interesting contrast with the social-driven nature of Memecoins. Memecoins rely on Twitter propagation and FOMO momentum but lack a structured probability basis. According to the latest data, the Pump.fun platform creates 10,417 tokens per day, but 9,912 fail within 24 hours, showing extremely high levels of manipulation and speculation. In contrast, prediction-market social memes (such as probability charts) provide sustainable attention tracking and give users an information-based foundation for investment decisions.
Breakthroughs in Technological Innovation: Solving Five Structural Problems
Faced with the five structural problems—liquidity paradox, market discovery barriers, user expression limitations, permissionless creation dilemmas, and oracle settlement challenges—the new generation of entrepreneurs is seeking breakthroughs through systematic technological innovation:
Liquidity innovation: Just-in-time (JIT) bots provide capital only when users need it, monitor large trades, and inject concentrated liquidity. Continuous combinatorial markets challenge the binary structure, allowing traders to express views across a continuous range, consolidating liquidity that would otherwise be scattered across related markets (e.g., Bitcoin at $60k vs. $65k vs. $70k).
Enhanced expressive capability: Seda builds perpetual contracts using Polymarket and Kalshi data, enabling continuous settlement rather than waiting for discrete events. Limitless offers 1–60 minute binary options on cryptocurrency prices, providing implicit leverage through rapid settlement. Hyperliquid’s HIP-4 “event perpetual contracts” trade probability changes rather than only final outcomes, addressing the biggest problem of leverage trading in prediction markets.
Optimized distribution strategies: Flipr embeds prediction markets into Twitter, allowing users to trade directly by tagging bots and turning social information flow into a trading interface. Platforms such as TradeFox aggregate odds across multiple platforms, route orders to the best venue, and integrate real-time news feeds. This strategy is particularly suitable for attention assets, helping users discover undervalued cultural events.
The Financialization Prospects of the Attention Economy
The biggest opportunity for attention as an asset class may first emerge in the stock market. Stock prices consist of DCF value (intrinsic value) and memetic value. Historically, most stocks did not possess significant memetic value, but in recent years—thanks to WallStreetBets and 24×7 retail-trading platforms—more and more stocks have begun to exhibit persistent memetic value.
As the trading of more assets becomes influenced by memetic value, developing methods for modeling this value becomes necessary. Sophisticated investors are already using metrics such as follower counts, likes, and view counts to measure market sentiment. Prediction markets and other oracle structures can serve as useful tools to measure stock attention, thereby enabling the construction of better trading models.
More importantly, predicting attention itself is an economically valuable activity. Attention is a leading indicator of consumer preferences and spending; companies allocate R&D, hiring, and marketing budgets based on attention flows. The key is to find new heuristics to model these flows.
Evolution of the Regulatory Environment and Compliance Challenges
The regulatory environment for prediction markets in 2025 presents a complex landscape of federal support juxtaposed with state-level challenges. The U.S. CFTC defines prediction markets as “event contracts,” providing an important legal foundation for industry development. However, state-level regulatory challenges are severe; the ORACLE Act proposed in New York State would ban prediction markets related to sports, politics, and more, potentially affecting 20–30% of the potential market size.
For attention assets, regulatory risk is relatively low because attention prediction is generally regarded as a financial derivative rather than gambling activity. However, manipulation risks still need attention, especially due to the manipulability of social media data. Using prediction markets as inputs for attention oracles introduces “embedded manipulation costs,” which theoretically reduces malicious manipulation because adversarial traders must bear capital risk to influence the index.
Limitless’s Innovative Positioning and Market Opportunity
Against the backdrop of this large-scale industry transformation, Limitless represents an important attempt to drive prediction markets deeper into vertical applications. By focusing on short-term, high-frequency cryptocurrency price predictions, Limitless not only solves the user-experience problems of traditional prediction markets but, more importantly, pioneers an entirely new application scenario for Pre-TGE hedging.
The platform’s cumulative trading volume exceeding $550 million demonstrates product-market validation. By decomposing complex option structures into simple binary prediction events, Limitless has effectively created an entirely new category of Pre-TGE hedging, providing innovative solutions for risk-management needs during the Pre-TGE stage.
More strategically, the Limitless model can be extended into the realm of attention assets. By offering fast-settling binary options on the attention of crypto projects, the platform can become a key infrastructure layer that connects project issuance, price discovery, and risk management, contributing to the mature development of the entire crypto ecosystem.
HTX Research spokesperson remarked, “As prediction markets evolve into mainstream financial infrastructure, we see wider institutional adoption unlocking trillions in value through attention oracles and perpetuals that hedge cultural and economic shifts—far surpassing the fleeting hype of memecoins with structured, information-driven opportunities for all investors.”
Conclusion & Outlook
Prediction markets stand at a historic turning point, transitioning from speculative tools to financial infrastructure. The systematic resolution of the five structural problems will not only unlock the massive potential of prediction markets but also give rise to attention assets as a completely new financial category. Unlike Memecoin trading which relies on luck and FOMO, prediction markets based on information arbitrage provide small-capital investors with a more rational and controllable investment opportunity.
The innovative architecture of attention oracles enables two-way trading for topics that already have high attention, addressing the limitation of traditional UGAs that start from zero. As the technological infrastructure continues to improve and the regulatory environment clarifies, Attention Perpetuals have the potential to become the next major financial innovation, providing effective risk management tools for attention flows in cultural, sports, political, and other domains.
In this evolutionary process, verticalized professional platforms will play an increasingly important role. Innovators like Limitless, which focus on specific application scenarios, not only carve out unique competitive advantages for themselves by deeply addressing pain points in niche segments, but also pave the way for the entire prediction market industry to penetrate deeply into the attention economy. In the future, prediction markets will not only serve as tools for price discovery but will also become critical infrastructure for attention flows, laying a solid foundation for the next stage of development in the digital economy.
References:
https://chainplay.gg/blog/lifespan-pump-fun-memecoins-analysis/ https://crypto.com/us/research/prediction-markets-oct-2025
The post first appeared on HTX Square.
