UNTAMED 101: HEDGING
➡️ Let’s say you’re expecting a big airdrop in the future from OpenSea, Abstract, Moonbirds, Monad, MegaETH, etc.
➡️ The market looks okay now, but you’re worried it’ll tank and you want to lock in gains
➡️ You can hedge your future exposure with a variety of tools. Here are some ideas...
➡️ You can short its perp market on Hyperliquid (if it exists). This locks in your price because you're long in the future and short right now. But the odds are high there'll be a scam wick to liquidate you or you'll lose money to a funding rate, so it's risky
➡️ You can use whales dot market to find a buyer, but liquidity/volume can be very small and it requires you know how much you're getting
➡️ A third option is to use Polymarket to find a relevant prediction market. For example there's one about OpenSea's FDV 24 hours after TGE. You can buy that it'll be low, this way you'll make money if it's low and if it's high
➡️ A fourth option is proxy hedging, shorting another crypto you think would move similarly. Like shorting a basket of L2 tokens + ETH if you're getting MegaETH. This can work out but it's not precise
➡️ A fifth option is to use options contracts in the stock market. You can buy a put on like the Ethereum ETF or Bitcoin ETF for 6 months out so if the market falls then you'll make money there at least
➡️ There’s a simpler strategy almost nobody talks about: soft hedging
➡️ Instead of being fancy, you de-risk your overall portfolio now because you're expecting more crypto later
➡️ Example: You have $10K in crypto and expect a $5K airdrop in the next few months
➡️ Soft hedging = selling some of your $10K crypto now to take money off the table and de-risk your market exposure
➡️ If the market tanks in the future, you'll be happy for the cash. If the market goes up, that's okay because you're getting an airdrop anyway
Fun fact: "Hedge funds" were named this way because they were masters of hedging risk
Did I miss any hedging tools?