no, that's the point of hedging. derivatives can have unlimited downside

Only if you're long. There are plenty of unlimited risk options strategies.

This is absolutely not true.

“Financial derivatives” and “downside is limited” should never appear in the same sentence without strong conditions on what sorts of derivatives/ combos of them

I think people in the thread are mistakenly conflating the idea of buying options with writing options to sell, the latter of which can have unlimited downside