To receive an APR, liquidity provider fees and farm rewards passively via low or high risk lending.
To short a token by borrowing, immediately selling, and buying it back later at a lower price.
To go long in two tokens by borrowing, while receiving liquidity provider fees and farm rewards.
To take a leveraged long position in a lent asset, someone can, e.g. can lend BNB, borrow BUSD, sell for more BNB & lend BNB again to end up in a ~1.5x-3x leveraged position in BNB depending on the collateralization ratio.
Perform arbitrage with a variety crypto while staying long in our core asset.
Borrowers can only use low risk tokens as collateral, (important note: high risk tokens can be used on the swap to provide liquidity, swap and farm rewards)
When someone borrows, 50% of the tokens come from the low risk pool and 50% come from the high risk pool. So, if one pool is greater than the other, then less than 100% of the combined pools can be borrowed.
Lenders may have to wait until loans are repaid to fully withdraw their lent tokens.