How Can a Portfolio Manager Use Derivatives to Hedge against the Risk of Token Governance Changes?

A portfolio manager can use derivatives, such as futures or options, to hedge against the financial impact of adverse governance changes. For instance, if a controversial proposal is being voted on that could negatively affect the token's price, the manager could buy put options or short futures contracts on the token.

This creates a synthetic short position that profits if the token's price drops. This strategy allows the manager to maintain their long-term investment while mitigating short-term governance-related market risk.