With an actual win rate of only 60%, data reveals the truth behind ICO predictions on Polymarket.

Author: @WazzCrypto , Legion

Compiled by: Frank, PANews

Prediction Market Observations in the Token World

Polymarket's token sale marketplace has processed nearly $250 million in transactions. The platform boasts impressive accuracy figures: 100% accuracy in predicting subscription amounts and over 90% in FDV (Fully Diluted Valuation). However, deeper analysis reveals these figures to be misleading. The real signal lies not in what the public predicts, but in how wildly wrong they are.

By analyzing 231 prediction markets across 29 token sale events and cross-referencing historical probability data from Polymarket with actual token performance on CoinGecko, we found that "prediction markets are not reliable predictive tools. Instead, they are actually sentiment indicators and often a contrarian signal."

Key findings: In the week leading up to market close, the accuracy rate of actual predictions was only 66.7%. At crucial moments, the public has a one-third chance of being wrong, and incorrect predictions often exhibit systematic over-optimism.

24-Hour Volatility Issue: Using hourly data from CoinGecko, we found that Polymarket's "FDV higher than X one day after launch" market is actually betting on extreme volatility. The average 24-hour price change is ±23% (e.g., best performance: Monad +54.8%; worst performance: Trove -38.7%). 75% of tokens experience a sell-off within the first 24 hours of trading. In this scenario, Polymarket's accuracy in predicting 24-hour FDV is only 62.5%.

The Fallacy of Accuracy: The Market Is Wrong One-Third of the Time

When we track market probabilities that change over time, rather than just looking at static data at settlement, a completely different picture emerges. The reason subscription amount predictions appear "100% accurate" is because, as sales progress, the final figures inevitably leak out. Insiders and observers update prices accordingly; this is merely post-hoc price discovery.

Key Insight: The reason why the call and FDV markets tend to have 100% accuracy at closing is because they settle only after the outcome is essentially certain. The call market closes after the sale ends; the FDV market closes 24 hours after the release. The only meaningful predictive metric is the accuracy rate one week before closing, which is when real uncertainty exists. A 66.7% accuracy rate for call forecasts indicates that the market is wrong one-third of the time at crucial moments.

The public's prediction was wrong because they were too optimistic.

We reviewed every market prediction where "public confidence exceeded 60% but ultimately failed to materialize." In every case, the error was consistent: over-optimism. The public consistently believed that funding amounts would be higher than actually achieved and valuations would be more expensive than they were.

This systemic bias suggests that the participants in these markets are optimistic speculators who are attracted to the token sale because of their bullish outlook.

Overly optimistic vs. token performance (based on ICO data)

Methodology: This analysis only selects markets that have conducted public ICOs and issued tokens, using Polymarket odds from the week before the market closes.

Excessive optimism = (Polymarket forecast FDV - actual 24h FDV) / actual 24h FDV.

The Y-axis shows the price performance from the ICO to the present.

Data shows a moderate negative correlation between over-optimism and ICO returns (r=-0.41). Monad is considered "undervalued/pessimistic" by the market (-25%), but its price is still down 24% from its ICO price. Ranger is the most "over-optimistic" (+72%), and its price is currently down 32% from its ICO price. Only Football.fun remains above its ICO price (+1%).

Token performance ranking: 40% of listed tokens are priced below their valuation.

The table below uses historical Polymarket odds from the week before the market closes to reveal the true accuracy of predictions. The pattern is clear: extreme over-optimism foreshadows disaster, and high trading volume on Polymarket, even when predictions are accurate, is often a contrarian signal.

Key findings: Among tokens with ICO data, 40% listed at a price lower than their ICO valuation. The average return from ICO to current price is -32.2%. Only Football.fun traded at a price higher than its ICO price.

This model is brutal: even tokens that launched at prices higher than their ICO valuations (such as Monad and Solomon) eventually fell below their issue price. Football.fun is the only winner among the five ICO tokens in this dataset, currently trading only 1% above its ICO price.

Key conclusions:

After analyzing 231 markets, $241.5 million in trading volume, and 8 tokens with verified 24-hour FDV data, several conclusions are clear:

1. The claim of "100% accuracy" is meaningless. The market closes for settlement only after the outcome is known (the subscription market closes after the sale, the FDV market closes after 24 hours), so the accuracy rate in the later stages is unsurprisingly close to 100%. However, the actual prediction accuracy rate in the week leading up to the close is only 66.7%. At crucial moments, the public has a one-third chance of guessing wrong.

2. Systemic over-optimism. Five of the top 15 markets showed over 60% confidence in thresholds that have never been reached before. FDV is overvalued by an average of +35%.

3. Predicting high trading volume in the market is a contrarian signal. Monad ($89 million) and MegaETH ($67 million) are examples of the most overly optimistic. The more money the public bets, the more confident they become, and the more drastically wrong they tend to be.

4. Conservative forecasts = better results. Tokens with relatively accurate forecasts (Monad, Football.fun) experienced smaller declines. Low hype and accurate forecasts appear to be bullish signals.

Trading signals:

Based on the analysis, we can extract actionable signals for assessing future token sales. This is not an absolute guarantee, but it represents a pattern that consistently holds true in the dataset.

Bearish signals:

• Polymarket trading volume > $50 million

• FDV over-optimism level >50%

• All FDV prediction thresholds are likely to fail.

• The subscription amount is overly optimistic (>30%).

Bullish signal (relatively speaking)

• Polymarket trading volume < $5 million

• FDV prediction bias within 20%

• Multiple FDV prediction thresholds were met.

• Public expectations are relatively conservative.

This asymmetry is significant. Bearish signals are strong indicators of poor outcomes. Bullish signals, on the other hand, are weaker, merely suggesting that the token might perform "not so badly" compared to overhyped alternatives. In a market where all tokens are falling from their all-time highs (ATH), "falling less" is the best-case scenario.

Summarize

Polymarket's token sale section is essentially a hype barometer (HypeMeters). The signal isn't in the prediction itself, but in how far it deviates. When the masses are frantically pouring money in betting on higher valuations, caution is the wise course of action. Historically, "extreme confidence" from the masses has often meant "greatest pain" for investors.