How Is the Black-Scholes Model Adapted for Use in Cryptocurrency Options?

The Black-Scholes model, while foundational, is adapted for crypto options by making adjustments for its unique characteristics. The model's assumption of continuous trading is often violated in crypto due to network congestion or exchange outages.

Furthermore, the interest rate component is often replaced by a "cost of carry" or funding rate from perpetual futures to account for the crypto asset's borrowing cost.