The crypto borrowing and lending platform Nexo recently provided transparency into exactly how its business makes money. Its lengthy breakdown follows the collapse of numerous high-profile crypto lending firms that were overexposed to defunct projects and businesses. Nexo’s Business Model As Nexo explained in a Twitter thread on Monday, Nexo’s primary business strategy is to facilitate collateralized credit. Its core services include crypto collateralized loans, interest-bearing crypto accounts, and spot, futures, and options trading. Through its Earn product (crypto interest…
Cryptocurrencies have always been known for their infamous use among darknet market platforms. According to a report from Chainalysis, Crypto darknet revenue hit a new record of $1.7 billion in 2020.
Eastern Europe Dominates Darknet Crypto Transactions
This new record comes as individual purchases from darknet markets reduced from 2019 to 2020. This could be attributed to the Covid-19 pandemic that led to a global shutdown of movements in the early parts of 2020. The $1.7 billion revenue generated in 2020 was about $4 billion more than the amount recorded in 2019.
Chainalysis remarks that the vast majority of revenue generated in the darknet market was from the Hydra marketplace. Hydra is the largest darknet market globally and accounted for over 75% of darknet market revenue globally in 2020. What makes Hydra revenue impressive is that it only serves Russian speaking countries and is limited to Eastern Europe.
Nevertheless, it generates large engagement among criminal rings in the region. Hydra is also within the top ten entities that process cryptocurrency payments in eastern Europe. The darknet platform announced plans to raise a $146 million ICO for a new global DNM service called Eternos. This was seen as part of the plans of the marketplace to expand to the English speaking world.
Apart from Hydra, the remaining concentration of revenue is generated in non-English speaking markets. Sales of drugs and fraud shops dominate the list. Several markets are fraud shops that sell stolen credit card information. Marketplaces that offer hacking exploits and stolen accounts also made it to the list.
46% of Illicit Transactions Made from Standard Exchanges
Chainalysis also noted that about 46% of darknet marketplace transactions in 2020 came via regular crypto exchanges. This represented an increase of 16% from 2019 when the percentage was 30%. In contrast, P2P exchanges saw their share value reduce within this period.
This could be because standard exchanges are popular and easier to use for new to cryptocurrency. The Covid-19 pandemic could also have played a part as street sales reduced during the lockdown period.
The increase in transactions via cryptocurrency in the darknet is not a good sign for the crypto industry. Cryptocurrencies have long suffered prejudice from critics that claim that criminals largely use them. Nevertheless, the revenue recorded is just a fraction of the total circulation in the crypto market.