Hydra: Lessons from the World’s Largest Darknet Market

Criminology & Public Policy, 22(4) (pp735-777)

41 Pages Posted: 22 Jul 2022 Last revised: 29 Nov 2023

See all articles by Priyanka Goonetilleke

Priyanka Goonetilleke

University of Pennsylvania, Department of Economics

Alex Knorre

Boston College; European University at St. Petersburg (EUSP); University of Pennsylvania - Department of Criminology

Artem Kuriksha

University of Pennsylvania - Department of Economics

Date Written: June 29, 2022

Abstract

We present a comprehensive description of Hydra, the largest darknet marketplace in the world until its shutdown in April 2022. We document the main features of Hydra such as dead-drop delivery, feedback and reputation system, escrow, and dispute resolution. Using data scraped from the platform, we quantitatively examine the scale and the structure of the marketplace. We find that it has been highly competitive, geographically covering at least 69% of the Russian population and trading a wide variety of drugs, while also allowing the wholesale trade of drugs and precursors. The dead-drop delivery system used on Hydra was expensive, as the courier costs comprised a substantial proportion of the sale price of drugs on Hydra. We contribute to the research on drug cryptomarkets by studying an unprecedentedly large non-Western marketplace that existed substantially longer than any other known darknet market.

The phenomenon of Hydra shows that shut-down policies applied to darknet marketplaces have a large effect and implicitly shape the whole drug market. Without these policies, a pervasive digitalization of drug trade can occur. The major cost of allowing marketplaces to grow is the probable increase in the consumption of illegal drugs due to convenience for consumers and facilitated cooperation between suppliers. This cost must be weighed against the potential benefits, including a higher quality of drugs, a decrease in potential violence, and the incentives for a large marketplace to self-regulate. The case of Hydra also suggests the relevance of financial regulation to limit the growth of darknet marketplaces.

Keywords: Hydra, darknet, marketplace, illegal drugs

JEL Classification: K42, L86, L14, L15

Suggested Citation

Goonetilleke, Priyanka and Knorre, Aleksei and Kuriksha, Artem, Hydra: Lessons from the World’s Largest Darknet Market (June 29, 2022). Criminology & Public Policy, 22(4) (pp735-777), Available at SSRN: https://ssrn.com/abstract=4161975 or http://dx.doi.org/10.2139/ssrn.4161975

Priyanka Goonetilleke

University of Pennsylvania, Department of Economics ( email )

160 McNeil Building
3718 Locust Walk
Philadelphia, PA 19104
United States

Aleksei Knorre (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

European University at St. Petersburg (EUSP) ( email )

3 Gagarinskaya Street
St. Petersburg, 191187
Russia

University of Pennsylvania - Department of Criminology ( email )

483 McNeil Building
Philadelphia, PA 19104
United States

Artem Kuriksha

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

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