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🤓Functioning of WOW protocol
WOWswap is a 1-click leverage trading & lending protocol that runs on Ethereum, BNB Chain, Avalanche, IoTeX, Solana and Polygon. Buy and sell your favorite tokens with 5x leverage.
WOWswap is a fully community-owned protocol based on a simple idea: liquidity providers can create a liquidity pool , and traders can borrow these funds to buy up to 5 times more tokens. Protocol fees, interest rates for lenders and borrowers, liquidation ratios and other settings are decided by holders of WOW tokens — our governance token.
Making a WOW swap is as easy as making a regular swap on Uniswap or Pancakeswap — extra capital will be automatically borrowed from the liquidity pool.
In the example below with 1 BNB you would be able to buy your favorite token for 5 BNBs, so you will receive 5 times more tokens
Instead of the original token you will receive a proxy-Token (for example, if you bought CAKE you will get prxCAKE tokens), which is pegged 1:1 to the original in WOWswap’s smart-contract. Proxy-Token will be converted back to the original token when you decide to close your trading position.
If the price of your token goes up, you can swap proxy-Tokens back to BNB and receive a multiplied profit. In this case a 5% fee (set by community) of your profit will go to back to the community via the insurance fund (2,5%) and token buy-back and burn 🔥 (2,5%).
If the price of your token goes down below the liquidation threshold, then anyone can become a margin caller by triggering the liquidation of your trading position — in this case you will loose all collateral invested in the trade.
The BNB pool will still receive back borrowed funds plus the accrued interest, and the margin caller gets the rest of the funds as a reward.
WOWswap uses Chainlink Price Feeds as our go-to oracle mechanism to prevent on-chain actions based on manipulated price data. It ensures protection against any potential data manipulation attacks that are funded by flash loans.
WOWswap V2 allows buying a token with leverage if its AMM-based price is less than 102% of the Oracle’s price.