Blockchain analytics firm Chainalysis has published a new report detailing the dynamics of darknet markets and fraud shops after the former giant Hydra Market collapsed due to joint actions from authorities in Germany and the United States.
After the U.S. Department of Treasury Office of Foreign Assets Control (OFAC) sanctioned Hydra in April and German agencies ordered its closure, average daily revenue for all dark web markets fell from $4.2 million to $447,000.
Total darknet market revenue for 2022 was $1.5 billion, a significant decline from $3.1 billion in 2021. Other marketplaces most likely channeled their efforts towards attracting former Hydra vendors and users, as most fraud shops gained their initial market share after the platform’s collapse.
The Struggle for Darknet Market Dominance
As per the report, three major darknet markets gained dominance in the wake of Hydra’s downfall. While their revenues did not come close to Hydra’s, Mega Darknet Market, Blacksprut Market, and OMG!OMG! Market recorded higher shares.
Notably, each of the three platforms dominated the market at different periods. The first was OMG, whose period of dominance was immediately after Hydra’s demise.
Although OMG became active in July 2020, its deposit volumes were so low that it was more of a personal operation than a darknet market. However, the platform recorded high inflows as soon as Hydra went down, most of which came from Hydra counterparties.
The inflows continued until June, when OMG suffered a distributed denial of service (DDoS) attack. The attack caused vendors and users to migrate to Blacksprut Market and Mega Darknet Market. Blacksprut also got hacked in November, forcing users to move to Mega Market.
Nonetheless, OMG recorded more inflows and activities than Blacksprut and Mega Markets throughout 2022.
An Administrative Link?
Interestingly, on-chain data has shown that OMG’s central wallets use a group of deposit addresses previously used by Hydra, which is owned by a high-risk exchange operating primarily in Russia.
Blacksprut and Mega sent funds to the same group of addresses but not as much as OMG. This suggests an administrative or vendor overlap between all four markets but primarily between Hydra and OMG.