When a trader opens a leveraged trading position (long or short), the trader takes a loan from the liquidity pool at a current Hourly Interest Rate (HIR). Therefore, to make leveraged trading possible Liquidity Providers (LP) need to maintain enough liquidity in liquidity pools. Anyone can become a liquidity provider by supplying liquidity to the liquidity pools.
WOWswap V2 has two single-asset liquidity pools on BNB Chain (BNB and BUSD), 3 single-asset pools on Polygon Network (MATIC, ETH and USDC), 2 on HECO (USDT and HT), 2 on Avalanche (USDT and AVAX), two on IoTeX (BUSD and IOTX) that are used for opening long positions.
For short positions there are as many tokens for lending as there are tokens listed on WOWswap. In this case, liquidity providers lend tokens to shorting.
When a user deposits asset to a liquidity pool, he/she will get interest-bearing tokens representing the liquidity provider's share of the pool. For example, by depositing BNB or BUSD to liquidity pools, the LP gets ibBNB or ibBUSD tokens.
When a LP wants to withdraw the liquidity from the pool, the LP should convert ibBNB or ibBUSD tokens back to BNB or BUSD.
Under normal conditions, if a LP kept the liquidity in liquidity pools for some time, so that traders borrowed and repaid their loans, the LP can expect that the same amount of ibBNB/ibBUSD tokens will convert in a bigger amount of BNB/BUSD. However, in case loss-making trades were not liquidated on time, liquidity pools might incur losses, and ibBN/ibBUSD tokens will convert in a smaller number of BNB/BUSD.