How Does Residual Consensus Risk Affect the Hedging Cost for Derivatives Issuers?

Residual consensus risk, the small but non-zero chance of a security breach or chain re-organization, increases the hedging cost for derivatives issuers. Issuers must price this risk into the contracts they offer.

The higher the perceived risk of the underlying asset's network failing, the more expensive it becomes to hedge against potential price volatility or contract failure. This translates to higher premiums for options and futures.