> For the complete documentation index, see [llms.txt](https://docs.wowswap.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.wowswap.io/about/wowprotocol.md).

# 🤓Functioning of WOW protocol

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

![](/files/-MYh_H-Xrb4aWa7gFhJT)

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%).

![](/files/-MYh_98CUktiKAug8xbe)

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.

![](/files/-MYh_XhugtjrkQZHRvbF)

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.

## Chainlink Integration

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.

![](/files/-MafXoY9ZWeRlok8JEt1)