2022 saw a year-over-year decline in revenue from darknet marketplaces and fraudulent shops. The total revenue of the dark web market by 2022 ended at $1 billion, down from $2 billion in 2021.
Chainalysis published an analysis showing that four of the top five top-earning darknet marketplaces in 2022 were drug-focused mainstream darknet marketplaces, while only one, Brian Dumps, was a scam shop.
Hydra Market once again led the way as the top-earning darknet market in 2022, though it was sanctioned by OFAC and shut down in a joint US-German transaction in April; no other market surpassed the leadership in revenue that it accumulated in those four months.
Hydra shutdown triggered a decline in industry-wide darknet market revenuewith average daily revenue for all markets falling from $4.2 million shortly before its close to $447,000 immediately after.
While collective revenues from the drug markets did not fully recover, they slowly returned to previous levels in the second half of 2022. However, fraudulent shops continued to decline.
Scam shops are a unique segment of darknet marketplaces that sell compromised datasuch as stolen credit card information and other forms of personally identifiable information (PII) that can be used for fraudulent activities.
While darknet markets largely recovered after the Hydra shutdown and fraudulent stores did not, single-vendor stores showed a different pattern.
The analytics firm also shows that over the course of 2022, a negative relationship was observed between funds sent to regular darknet marketplaces and funds sent to single-vendor stores. For example, an increase in revenue from single-vendor stores can be observed starting in March, around the same time that revenue from the traditional darknet market began to decline.
The battle for market dominance, after the closure of Hydra
Before the police shut down Hydra, it was the world’s largest darknet marketplace. Before its demise, the Hydra Marketplace captured 93% of all economic value received in the 2022 dark web market ecosystem. Russia-based dark web marketplace enabled drug sales and offered money laundering services to cybercriminals.
After the Hydra collapse, various markets gained revenue, but three in particular dominated: Blacksprut, OMG!OMG! Market and Mega Darknet Market. Interestingly, each of the three has led the market at different times, although OMG’s period of dominance immediately after Hydra’s collapse was the strongest the three have ever had.
Through most of April and May, OMG captured more than 50% of the total market share, peaking at 65% on April 23, and operated largely unchallenged by the competition, indicating its potential as Hydra’s successor.
In June, OMG suffered a Distributed Denial of Service (DDoS) attack, which likely caused vendors and customers to migrate to the Mega Darknet Market and Blacksprut Market at the time..
How drug buyers and illicit users migrated from Hydra to other darknet markets
Retail market customers and illicit users of Hydra’s money laundering services were crucial to the battle. You can investigate this using on-chain data to see where former Hydra users migrated to after the market closed. For this analysis, the remainder of 2022 after Hydra’s shutdown on April 5 is divided into two periods:
OMG Domain: The 50-day period immediately after the closure of Hydra when OMG captured approximately 100% share of the dark red market.
Post-OMG Domain: The Rest of 2022when OMG became one of the top three markets along with Blacksprut and Mega.
Blockchain analysis also reveals that several Hydra vendors have migrated to OMG following Hydra shutdown. The Chainalysis Reactor chart below shows a number of personal wallets associated with known Hydra providers who subsequently transact with OMG.
After account creation, the user would select their location and arrange direct exchanges from supplier to buyer. After the sale, the seller sent the buyer the geographical coordinates and a photo of where his well-hidden purchase could be found.. OMG also offers this same service.
According to Chainalysis, there is no definitive evidence to confirm that any of the creators or administrators of OMG were formally associated with Hydra. However, warehouse address overlap and instant mass migration of Hydra users to OMG after Hydra shutdown suggests it’s certainly possible.
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