The present invention is directed to a polymerase activity assay that produces a strong optical signal when a primer-template complex is extended to full-length product. The assay uses Cy3 as the molecular beacon and Iowa Black® RQ as the quencher. The signal-to-noise-ratio (STNR) of this donor-quencher pairing is ˜200-fold over background, which is considerably better than other donor-quencher pairs (STNRs ˜10-20-fold). The STNR allows for solution-based monitoring of polymerase activity. Because the sensor functions via Watson-Crick base pairing, the polymerase activity assay may also be used to evolve polymerases to accept xeno nucleic acids as substrates.