Efficient Market Hypothesis (EMH) is a lie in crypto

08 Jul 2025

Even with 100% transparent blockchains and real-time data, the market is not efficient.

Here’s a real example that proves it, and why crypto still has massive alpha for those paying attention.

You’ll learn:

• Why EMH breaks down in web3 • A textbook case of information asymmetry • How to spot alpha others miss

Let’s dive in.

EMH says asset prices (or yields) reflect all available information.

If the info is public, the market should price it in - fast.

In DeFi, you’d expect even more efficiency. Why?

Because on-chain = full transparency.

Everyone sees the same data: • TVLs • Yields • Deposits/Withdrawals • Contract logic

No banks. No gatekeepers. No 3-month lag to see quarterly company financials.

It should be the most efficient market in the world.

That was my assumption too (many moons ago).

Back then, I believed crypto would outperform TradFi on efficiency alone.

Why wouldn’t it? TradFi is slow, opaque, and fragmented. You need Bloomberg terminals and insider networks.

But I was dead wrong.

Every user sees the same data. Every pool is visible. Deposits and withdrawals are instant. No switching costs. No hidden fees.

So in theory, the highest yield pool should get the most deposits, right?

Reality check:

The pool with the highest yield (Elemental's) is NOT the pool with the most TVL.

Let that sink in.

Everyone can see the yields. Yet money is still sitting in lower performing options.

Why?

Because EMH isn’t just about access to information.

It’s about distribution of that information.

And that’s where web3 breaks down - hard.

This is textbook information asymmetry.

New protocols = low to zero visibility Established protocols = momentum + trust + awareness

Unless you already know the alpha exists, you’re not going to find it.

In TradFi, everyone watches Bloomberg or reads WSJ.

In crypto?

You’re relying on Twitter (X). And Twitter is: • High noise • Low signal • Entirely dependent on who you follow

It’s fragmented attention, not efficient markets.

So the next time someone says:

“There’s no alpha left in DeFi, everything is public.”

Just laugh.

Because public ≠ visible Visible ≠ known Known ≠ acted upon

Crypto still has tons of alpha.

Not because the data is hidden… …but because most people don’t know where to look - or even what to look for.

And that’s your edge.

Stay sharp out there!

Last updated 22 days ago