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I wouldn't be at all surprised if the "selected, rigorously vetted" borrowers turned out to be anyone who has completed their KYC procedures.
The word "Institutional" is presumably supposed to lend credibility. After all, when have institutions ever ripped off the average Joe!?
How long have blockchain.com been offering lending for? Because I thought it was a fairly new thing for them, meaning the borrowers cannot have "established track records" unless blockchain.com have been buying personal information regarding loan amounts, lengths, repayments, etc., from other companies.
At no point have I seen anything from blockchain.com which states they will cover your losses if the borrower defaults on their loan. This is your money they are gambling with. They are taking some of the profits and assuming none of the risk.