As crypto matures, prediction markets are shifting from niche speculation to foundational prediction markets infrastructure, while simultaneously giving rise to a powerful new category of attention-linked assets.
In the first ten months of 2025, global prediction market trading volume reached $27.9 billion, according to Crypto.com Research, marking an explosive 210% growth compared to 2024. However, behind this headline expansion sit five deep structural bottlenecks: the liquidity paradox, market discovery barriers, user expression limits, permissionless creation dilemmas, and oracle settlement challenges.
Moreover, the sector stands in stark contrast to the Memecoin ecosystem. On Polymarket, around 85% of traders incur losses, yet their downside is defined and controllable. Meanwhile, the Pump.fun platform generates 10,417 tokens per day, of which 98.6% are identified as manipulative projects with an average lifespan of less than three months. For traders starting with $100, information-based prediction contracts resemble structured wagers, while Memecoin trading remains closer to slot machines driven by luck and timing.
Looking ahead, a third major asset class is emerging alongside cash flow assets and supply-demand assets: attention assets. By rebuilding prediction platforms as “attention oracles,” developers aim to support Attention Perpetuals (Attention Perps), giving traders direct financial exposure to cultural attention itself. That said, this evolution also solves the core limitation of traditional user-generated assets (UGAs), which must start from zero and struggle to capture already-established attention around sports stars or political figures.
In this transition, specialized platforms such as Limitless—which focuses on Pre-TGE hedging—are starting to plug structural gaps across the crypto market. A spokesperson from HTX Research noted in 2025 that prediction venues could evolve from speculative curiosities into reliable macro signals for institutional decision-making, particularly in markets tied to financial products firms can model and analyze.
The $100 capital game: small traders between structure and FOMO
In the realm of small-capital investing, prediction markets and Memecoin trading express radically different philosophies of risk management. This divergence shapes not only return expectations but also how participants view market efficiency and the value of information.
With an initial stake of $100, structured prediction contracts allow users to exploit information asymmetries instead of pure hype. On Polymarket, a minimum of $10 enables participation, and investors can spread exposure across 5–10 events. However, the key advantage lies in clearly defined risk: while traders may lose their full stake on one outcome, they understand odds and criteria from the start.
Moreover, price discovery in these markets generates specific opportunities for information arbitrage. Market odds reflect aggregated participant information, yet low-volume contracts may fail to reach real efficiency. That creates an edge for informed small traders with domain expertise. Detailed knowledge of local elections, emerging technologies, niche legal cases, or sports matchups can be translated into quantifiable returns whenever broader markets misprice probabilities.
By contrast, trading on Pump.fun illustrates a very different risk profile tied to FOMO and viral memes. The cost to launch a Memecoin is roughly 0.02 SOL (about $3–4 at current prices), and initial trading frequently starts at a market cap near $4,000, allowing a $50–$100 allocation to secure a substantial early slice. However, a Solidus Labs report shows that among 7 million tokens launched on Pump.fun, 98.6% are classified as “rug pull” or otherwise manipulative.
More critically, information asymmetry typically works against ordinary Memecoin traders. Creators have full information and wield multiple tools to shape price action, from orchestrated marketing pushes and influencer campaigns to social strategies designed to trigger FOMO. In this setting, the most potent “signal” is often the viral propagation potential of a coin, but such attention is fleeting. According to the data, 97% of participants secure less than $1,000 in profit across these tokens.
The liquidity paradox and evolving market design
Despite achieving $27.9 billion in volume in 2025, many prediction venues still lean heavily on subsidies to sustain growth. Polymarket has allocated roughly $10 million to market-making incentives, at times paying more than $50,000 per day to keep order books active. Today, incentives have fallen to only $0.025 per $100 traded. Meanwhile, Kalshi has spent over $9 million on similar programs. However, none of these schemes represents a long-term solution.
The core of the liquidity paradox stems from structural design. Unlike standard crypto liquidity pools, prediction contracts expire worthless for the losing side, without rebalancing or salvage value. Moreover, as markets approach settlement and outcomes become obvious, informed traders buy the winning side from market makers at favorable prices, while automated strategies continue quoting based on stale probabilities. This “toxic order flow” erodes market-maker capital and contributes to the fact that 85% of Polymarket users end up with negative balances.
A new wave of projects is attacking this pain point via alternative market mechanisms. Melee Markets applies bonding curves to event contracts, giving each outcome its own curve so early participants can secure better pricing without relying on professional liquidity providers. At the same time, XO Market requires creators to seed liquidity using an LS-LMSR AMM, ensuring market depth grows as more capital enters. That said, while these experiments cannot fully eliminate the liquidity problem, they open promising paths for decentralized prediction venues.
From Memecoins to structured attention assets
Across crypto, a distinct class of assets is emerging whose value is based primarily on attention rather than cash flows or physical scarcity. Traditional markets organize around two pillars: cash flow assets such as stocks and bonds, and supply-demand assets including commodities or foreign exchange. By contrast, attention-linked assets act as cultural Schelling points, with prices that track and monetize collective focus.
Today, most attention-linked tokens take the form of UGAs, including NFTs, creator coins, and Memecoins. From a cultural standpoint, Memecoins can be entertaining and expressive. However, from a financial perspective they are flawed instruments. Efficient attention assets should allow traders to gain direct, hedgeable exposure to the attention surrounding a subject and reward those who trade when they believe that attention is mispriced, enabling markets to encode collective forecasts about future focus.
A defining characteristic of current UGAs is that they generally launch at a valuation of zero. This reflects reality—new memes truly start with zero attention. However, the structure makes them unsuitable for tracking existing high-attention subjects. Taking LeBron James as an example, it is easy to launch meme tokens referencing him, yet dozens of similar tokens already exist. New issues begin near zero and cannot realistically represent his status as a global star with vast pre-existing attention.
Attention oracles and the design of Attention Perpetuals
The next structural leap in attention assets centers on Attention Perpetuals, or Attention Perps, which allow traders to go long or short on cultural attention itself. These instruments require true two-way trading, robust links to real-world attention data, and non-zero starting points that mirror existing prominence. Crucially, they also demand oracle systems that are both tamper-resistant and economically grounded.
Here, the innovation of the attention oracle design is to treat binary prediction contracts around a topic as input signals and to aggregate them into a weighted index based on price, liquidity, and time. This composite index is designed to capture real-time shifts in attention. For instance, multiple markets around LeBron James could be created, such as: “Will LeBron James have more than X million followers before the end of the month?”, “Will LeBron James win the championship in 2026?”, or “Will LeBron James win the MVP in 2026?”
Moreover, the index value would be derived by aggregating and weighting each contract’s probability, trading depth, resolution horizon, and perceived importance. A key advantage of this prediction-market-based oracle is that manipulation carries real and visible cost. If a trader wants to push LeBron’s attention index higher, they must buy positions in the underlying binary contracts at elevated prices, bearing capital risk whenever the market disagrees with their view.
Social media, viral charts, and new market participants
One defining feature of prediction market development in 2024–2025 has been viral propagation through social platforms. The core behavior loop involves users posting screenshots of contracts when they become topical, pulling more eyes—and therefore more liquidity—toward those markets. These “probability-over-time” charts are compelling because they juxtapose initial expectations with what actually unfolds.
As a result, a new category of participant—ordinary social media users—has become integral to the ecosystem. By sharing novel meme formats based on trading paths, they provide organic marketing and traffic acquisition for event platforms. For example, the Kalshi contract “Will Taylor Swift and Travis Kelce get married in 2025?” not only saw a spike in implied odds after the engagement announcement but also experienced a sharp rise in liquidity as social media activity intensified.
This dynamic offers a revealing contrast to the social-driven nature of Memecoins. Meme tokens also rely heavily on Twitter virality and FOMO, but lack any explicit probability foundation. According to recent data, Pump.fun mints 10,417 tokens daily, with 9,912 failing within 24 hours—evidence of extreme manipulation and speculative churn. In comparison, social memes built around prediction charts support ongoing attention tracking and provide a richer informational basis for traders making decisions.
Five structural bottlenecks and technological breakthroughs
Founders in the space increasingly frame industry challenges around five structural issues: the liquidity paradox, discovery friction, constraints on user expression, permissionless creation trade-offs, and oracle settlement reliability. However, a wave of technical innovation is beginning to address each of these dimensions with targeted solutions.
On the liquidity side, just-in-time (JIT) bots now supply capital only when needed, monitoring large orders and injecting focused liquidity to minimize inventory risk. At the same time, continuous combinatorial markets seek to transcend binary structures by letting traders express views across a continuous range—such as Bitcoin at $60k vs. $65k vs. $70k—so that liquidity is consolidated rather than fragmented across related contracts.
Enhanced expressive capability is another frontier. Seda builds perpetual-style contracts using Polymarket and Kalshi data, allowing continuous settlement instead of forcing participants to wait for discrete outcomes. Limitless offers 1–60 minute binary options on crypto prices, effectively embedding leverage through rapid turnover. Additionally, Hyperliquid‘s HIP-4 “event perpetual contracts” trade changes in implied probability rather than only final outcomes, addressing one of the largest obstacles to leveraged prediction trading.
Distribution strategies are also evolving. Flipr embeds trading flows directly into Twitter, enabling users to place bets simply by tagging bots and turning the social timeline into an execution layer. In parallel, aggregators such as TradeFox pull odds from multiple venues, route orders to the best market, and layer in real-time news feeds. This approach is particularly relevant to attention-centric assets, because it helps traders systematically surface undervalued cultural events.
Financializing the attention economy
The largest opportunity for attention as an investable asset may initially emerge in the equity markets. Public stock prices blend discounted cash flow (DCF) value with memetic value. Historically, most shares had minimal memetic components. However, the rise of WallStreetBets and always-on retail trading platforms has driven more tickers to exhibit persistent meme-driven premiums or discounts.
As memetic influences spread, investors need new methods to quantify and model this component. Advanced traders already track metrics like follower counts, likes, and video views to gauge sentiment. Prediction contracts and attention oracles can serve as more rigorous instruments to measure stock attention, enabling the construction of strategies that integrate both fundamentals and cultural momentum.
More broadly, forecasting attention flows is economically valuable in its own right. Attention acts as a leading indicator of consumer preference and spending. Companies allocate R&D budgets, hiring plans, and marketing spend based on where attention is heading. That said, the challenge is to develop robust heuristics and financial products that transform these diffuse signals into actionable risk tools.
Regulatory outlook and compliance landscape
In 2025, the regulatory environment surrounding event contracts remains fragmented, with supportive federal frameworks clashing with state-level headwinds. The U.S. CFTC classifies prediction contracts as “event contracts,” providing an important legal foundation for platforms operating under national rules. However, the proposed ORACLE Act in New York State would ban markets tied to sports, politics, and other categories, threatening an estimated 20–30% of potential market size.
For attention assets, regulatory risk appears somewhat lower, since attention-linked derivatives are typically viewed more like financial instruments than gambling venues. Nevertheless, manipulation concerns loom large due to the ease with which social data can be distorted. By using event markets as the input layer for attention oracles, designers effectively embed manipulation costs: adversarial actors must risk significant capital to shift indices, which theoretically deters casual abuse.
Limitless and the verticalization of prediction products
Within this broader transformation, Limitless illustrates how verticalized platforms can deepen prediction functionality in specific niches. By focusing on short-term, high-frequency crypto price forecasts, the platform tackles user-experience friction that plagues many general-purpose sites while simultaneously pioneering a new application of Pre-TGE hedging.
Limitless has already processed more than $550 million in cumulative trading volume, signaling strong product-market fit. By decomposing complex option structures into simple binary events, the platform has effectively created a new category of Pre-TGE hedging for token teams and early investors seeking to manage price risk before public launches. Moreover, this architecture can be extended to attention-linked markets by offering fast-settling contracts on the attention of upcoming crypto projects.
In doing so, Limitless could emerge as a critical infrastructure layer connecting project issuance, price discovery, and risk management. An HTX Research spokesperson argued that as prediction markets evolve into mainstream financial rails, institutional adoption of attention oracles and perpetuals could unlock trillions in value by hedging cultural and economic shifts, delivering structured, information-driven opportunities that stand in contrast to the fleeting hype cycles of many meme coins.
Conclusion: from price discovery to attention infrastructure
Prediction markets now sit at a historic inflection point, transitioning from speculative curiosities into programmable financial infrastructure. Systematically addressing the five structural problems—liquidity, discovery, expression, permissionless creation, and settlement—could unlock their full potential while cementing attention assets as a distinct financial category. Unlike casino-style Memecoin trading, information-driven contracts provide small-capital investors with more rational, controllable exposure to real-world outcomes.
At the same time, attention oracles open the door to two-way trading on already-prominent topics, resolving the zero-start limitation of traditional UGAs. As technology stacks mature and regulation becomes clearer, Attention Perpetuals could emerge as a major new instrument for managing risk across culture, sports, politics, and beyond. In that scenario, specialized platforms like Limitless will not only secure defensible positions in targeted verticals but also help transform event-driven contracts into core infrastructure for attention flows across the digital economy.
Source: https://en.cryptonomist.ch/2025/12/04/prediction-markets-infrastructure-analysis/
