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Volatility Hedging Protocols Meaning

Volatility hedging protocols are decentralised finance (DeFi) platforms that allow users to hedge against price fluctuations of cryptocurrencies. They do so by providing structured products, options, or synthetic assets designed to offset potential losses.

For example, protocols might offer options contracts that pay out if volatility exceeds a certain threshold, or they may offer delta-neutral strategies that balance long and short positions. These platforms leverage smart contracts to automate hedging strategies, enabling users to create customised risk profiles.

By providing accessible tools for volatility management, these protocols help investors protect their portfolios from extreme market movements while maintaining exposure to potential upside.

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