(Bloomberg) -- Uniswap may seem like just another cryptocurrency buzzword, but for those in the know, it’s the latest gateway to quick riches.

The so-called decentralized exchange, or dex, has become the hottest trading platform in the niche sector of digital assets known as decentralized finance, or DeFi. In less than two years since its launch, Uniswap’s average daily trading volume has jumped to about $220 million, according to data tracker CoinMarketCap.com. Researcher Messari estimates that makes it the largest DeFi exchange and the fourth-biggest overall in the crypto world, behind industry behemoths Binance, OKEx and Huobi.

Coin issuers and traders are flocking to Uniswap because it’s the preferred platform for crypto strategies such as yield farming, where some traders are realizing triple-digit returns by pooling and lending cryptocurrencies in exchange for interest and fees, while also often being awarded additional coins as incentives. Even though a good portion of the activity may resemble online gambling and Ponzi schemes, speculators aren’t deterred.

”It’s just phenomenal,” said Paul Veradittakit, a partner at Menlo Park, California-based Pantera Capital Management LP, which is considering investing in Uniswap’s own tokens. “We can really see decentralized exchanges make a huge dent in the market and potentially overtake centralized exchanges.”

DeFi apps are designed to let people lend, borrow, trade and take out insurance directly from each other, without use of intermediaries such as banks. Like during the initial coin offering boom that helped fuel the Bitcoin-led crypto bubble three years ago, this had led to the creation of hundreds of new apps and accompanying tokens in recent months.

Unlike most traditional crypto exchanges, Uniswap doesn’t charge issuers to list new tokens, and generates revenue through transaction fees. It also doesn’t check on user identities, which most traditional crypto exchanges started to do because of regulatory pressure to stamp out money laundering and other illicit activities.

Uniswap currently lists 845 tokens, according to CoinMarketCap. The world’s largest cryptocurrency spot exchange, Binance, lists 820 coins.

Uniswap runs via software that’s mostly not controlled by anyone. While a team of programmers works to improve it, the exchange is largely governed by a community of its own users.

Hayden Adams founded the New York-based exchange after losing his job as a mechanical engineer at Siemens AG in 2017. Adams and Uniswap didn’t respond to requests for comment.

The exchange has raised millions from venture capitalists including Paradigm, Andreessen Horowitz and Union Square Ventures LLC.

In its limited lifespan, Uniswap has shown its resilience. In August, an anonymous entity copied Uniswap’s code, and managed to suck away a chunk of Uniswap’s liquidity. The exchange has since grown even larger, partly thanks to the release of its own token to help improve user loyalty. The market capitalization of the exchange’s UNI token is about $560 million.

Whether regulators will take kindly to Uniswap remains to be seen. For now, large institutional investors appear to be mostly staying away from dexes, which are primarily used by retail investors.

Uniswap’s volume is generated by relatively few users, according to Kyle Samani, co-founder of crypto hedge fund Austin, Texas-based Multicoin Capital Management, who estimates that as of Sept. 1, only 50,000 to 100,000 people have used Uniswap. Binance, by comparison, had more than 15 million users at the end of last year.

“Saying that something is the category winner with fewer than 100,000 users who have ever used the product feels short-sighted,” Samani said. “This competition is just getting started. We are in the first inning.”

©2020 Bloomberg L.P.