Also known as cryptomarkets, mega darknet market DNMs are multi-vendor online illicit global commerce platforms that primarily specialize within the sale of illicit drugs. An established form of transnational organized crime, DNMs combine anonymisation networks and cryptocurrencies with encryption applied sciences. They're distinct from independent single-vendor retailers that additionally promote illicit drugs, and from other kinds of fraud shops.

The vacuum left by Hydra's takedown resulted in a veritable "Cambrian explosion" in DNMs, with at the least a dozen illicit projects having surfaced in its place to satisfy consumer demand. Serving international locations of the former Soviet Union, these new Russian-language DNMs have achieved close to-dominance of the general DNM ecosystem, representing over 80% of all deposits made to darknet marketplaces in 2022.

Despite Hydra’s traditionally large volumes - the marketplace acquired greater than $400 million between January 2022 and its demise in April (detailed here) - the new technology of DNMs has caught up rapidly. Following Hydra's seizure, the twelve new Russian-language marketplaces amassed approximately 24% more volume in a interval of five months than Hydra did in the primary 5 months of the yr when it was nonetheless live.

And though there are at the very least 70 lively DNMs globally as of November 2022, approximately 80% of market share is split between simply 4 players. Notably, all kind a part of the brand new wave of Russian-language DNMs. By contrast, the largest western bitcoin DNM presently in existence - ASAP Market - accounts for less than 10% of global DNM market share.

The particularities of DNMs working in the former Soviet Union means there may be little interplay between them and western/global darknet marketplaces. Each has different target audiences, distributors, modus operandi, and characteristics.

Four Key Differences Between Russian-language and Western DNMs:

1) Russian-language DNM distributors favour the useless-drop supply mannequin dubbed klad/клад (Russian for "treasure"), as opposed to the worldwide mail supply mannequin adopted by western DNMs. This restricts the previous to the geographic areas covered by the vendors and couriers. These can serve areas ranging from local neighborhoods to entire cities and regions, but most significantly, the vendors’ attain will not be international.

2) DNMs operating in former Soviet nations typically make use of fewer on-chain operational security measures. Address re-use is rife, as DNM actors on this space seem to function with more impunity and less concern for legislation enforcement action than their western counterparts.

3) Most Russian-language DNMs only help Bitcoin, with no privacy coin choices available. This additionally seems to reflect their lower perceived risk of being taken down by the authorities. By distinction, western DNMs provide Monero alongside Bitcoin or are Monero-only.

4) Russian-language DNMs search to ascertain monopolies, one thing most western DNMs largely avoid due to the resulting stress, consideration, and threat of regulation enforcement motion that such dominance may deliver.

Three Future Trends to look at:

1. The Russian-language DNM space is preparing for the inauguration of the broadly-anticipated Kraken Market, touted by the neighborhood as Hydra Market’s successor. Several marketplaces working in the former Soviet Union might disappear as distributors and consumers set up themselves on this new DNM, leading to a higher centralization of marketplaces in this area.

2. The broadly-mooted DNM decentralization is unlikely to materialize over the brief time period. The familiar cycle of DNM launch and growth followed by exit scams, law enforcement action, or voluntary withdrawal is more likely to proceed in 2023.

3. Western DNMs will proceed to innovate and spearhead blockchain operational security, including the likelihood to forgo Bitcoin and other public ledger blockchains altogether. For instance, AlphaBay Market’s second iteration - which claims to be the world’s largest DNM - is a Monero-solely marketplace.

About TRM Labs

TRM provides blockchain intelligence to help financial establishments, cryptocurrency companies, and public agencies detect, investigate, and handle cryptocurrency-associated fraud and monetary crime. TRM's risk administration platform includes solutions for transaction monitoring and wallet screening, entity risk scoring - including VASP due diligence - and source and vacation spot of funds tracing. These instruments enable a quickly growing cohort of organizations all over the world to safely embrace cryptocurrency-associated transactions, products, and partnerships.