At Consensus 2026 in Miami, executives from Two Prime, Ledn, and Lygos Finance laid out what institutional borrowers really want: fewer DeFi complexities, more traditional finance-style structures. The message was clear — after the crypto credit collapses of 2022, the priority has shifted to custody, transparency, and standardized lending.
What borrowers actually want
Institutional borrowers are no longer chasing yield through convoluted DeFi protocols. Instead, they're asking for clear custody arrangements, transparent terms, and lending structures that look a lot like what they'd get from a bank. That means standardized contracts, known counterparties, and assets held in segregated accounts — not pooled in smart contracts with uncertain recourse.
The 2022 hangover
The shift isn't accidental. The crypto credit crises of 2022 — from Celsius to BlockFi to Three Arrows Capital — burned institutions that thought they understood the risks. Now, any lending product that obscures how funds move or who holds them gets rejected. Borrowers want to know exactly where their collateral sits and what happens in a default.
Saying no to complexity
Complex DeFi products — multi-token vaults, algorithmic rate setting, flash-loan-dependent strategies — are falling out of favor. The panelists noted that institutional clients increasingly demand simplicity. They'd rather trade some upside for predictability. That's a direct reversal from 2021, when the same crowd was chasing the highest APY regardless of structure.
What lenders will need to adapt
For firms offering institutional lending, the takeaway is blunt: if you can't offer audited custody, clear legal frameworks, and standard documentation, you'll lose the mandate. The market is demanding TradFi rigor wrapped around crypto assets. Those that deliver it will get the volume; those that don't will struggle to attract serious balance sheets.
