DeFi can indeed offer more sophisticated hedging models through on-chain options tools. These tools enable trustless, transparent, and programmable derivatives, allowing users to hedge against price volatility, impermanent loss, or other risks. On-chain options, built on smart contracts, provide customizable payoffs, automated execution, and real-time pricing via AMMs or order books. Compared to traditional finance, DeFi’s permissionless nature and composability allow for innovative strategies, like combining options with yield farming or staking. However, challenges such as high gas fees, oracle reliability, and liquidity fragmentation may limit complexity. Advances in layer-2 solutions and cross-chain interoperability could further enhance DeFi’s hedging capabilities, making it a viable alternative for institutional and retail investors.