Can Financial Derivatives Be Used to Hedge against the Risks of a 51% Attack on a Cryptocurrency?

Yes, financial derivatives can theoretically be used, though direct products for this are not common. Exchanges and large holders could use options or futures contracts to hedge against the price crash of a coin during an attack.

For example, buying put options allows an investor to sell the coin at a predetermined price, protecting them from downside volatility. A more complex strategy could involve creating custom derivatives, like a binary option that pays out if a network reorganization of a certain depth occurs.

These instruments don't prevent the attack but can mitigate the direct financial losses for holders.