With the same DRM they already use I suppose (I don't have a kindle, so I don't know any details). If it was possible to store the books somewhere else, people would be already doing that to share the books.
The DRM is what's stopped me from buying a Kindle so far. But for a lending service like this it wouldn't bother me much... If they roll this out in the UK too I might just get one, especially since I already have prime (curse you, Amazon, for leading me into temptation; Prime has made me spend so much more money with them..)
