How Does the Black-Scholes Model Adapt to the 24/7 Nature of Crypto Markets?

The traditional Black-Scholes model, designed for conventional finance, assumes continuous trading and uses a "risk-free" rate. In the 24/7 crypto market, the model's application is adapted by using a continuously compounding risk-free rate and accounting for the non-stop nature of trading.

However, a major challenge is accurately defining the risk-free rate in DeFi, which often involves using stablecoin lending rates. The model is often modified or replaced by more complex models to better handle crypto's extreme volatility and continuous market access.