Why Paying Down Margin Debt Beats Depositing Stock
Patrick McKenzie shows why paying down debt reduces margin call risk far faster than depositing volatile shares during a market drawdown.
Liquidating a whale by hand, 22 times
With Patrick McKenzie · Thursday, November 12, 2026
Patrick McKenzie breaks down the mechanics of financial leverage, explaining how balance sheet math dictates the exact asset price drop required to wipe out an institution's equity. He details how traditional brokerages manage margin calls and customer risk before contrasting this with decentralized finance protocols. McKenzie recounts his firsthand experience manually liquidating an insolvent whale account on the Solana lending protocol Solend 22 times during the market panic of the FTX collapse.
Key takeaways
- When an account holding Google stock falls to $1,600 in assets against $1,000 in debt, depositing $400 in cash drops the debt ratio to 0.6-to-1, while depositing $400 in shares only brings it to 1-to-1. Read more →
- Solend offered a 5% liquidation bonus on an insolvent whale account during the FTX collapse, alongside a 2,600% interest rate to attract new deposits. Read more →
- Patrick McKenzie shorted Tether without trusting centralized exchanges by depositing USDC and borrowing USDT on the Solana lending protocol Solend. Read more →
3 articles from this episode
Patrick McKenzie Liquidated Solend by Hand 22 Times
Patrick McKenzie manually liquidated an insolvent whale on Solend 22 times during the FTX panic, turning broken interfaces into a 50% return.
Patrick McKenzie Shorted Tether Without Centralized Exchanges
Patrick McKenzie explains how he shorted Tether on Solend, avoided centralized exchanges, and had to liquidate an insolvent whale 22 times.
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