Nimbus CEO Alex Lemberg On The Power Of Blockchain To Create A Society In Which Everyone Is Empowered
Nimbus is a decentralized autonomous organization (DAO) regulated ecosystem that offers a variety of revenue streams to users on a single platform.
Alex Lemberg is the CEO of Nimbus, a decentralized autonomous organization (DAO) regulated ecosystem that offers a variety of revenue streams to users on a single platform, and the first piece of advice that he offers to people in the UAE who are keen on making use of blockchain technology is to understand the revolutionary potential it brings to the market. "By this, I mean the distributed ledger aspect of it, the smart contract aspect, the trust-less environment, and to treat it regardless of a specific region or any other region," he says. According to him, the significance of blockchain technology is that it breeds trust, in an environment that does not offer it, at least not in a format to which people are accustomed.
"We, as an entrepreneur-based economy, or China, as a state-based economy, have rightfully relied on institutions," Lemberg explains. "If you compare the very first transaction that's ever been done, to any transaction that we do today, the one moving factor is that we don't necessarily know the people that we transact with. There's a certain level of insecurity, and a certain level of not having an established trusted relationship. So, we started to create institutions to bridge that one gap for any transaction that we do, whether it's law firms, accounting companies, or banking companies- these institutions played a tremendous role."
However, with the advent of blockchain and smart contracts which cannot be manipulated or hacked, Lemberg believes that society is, for the first time ever, starting to move away from the absolute need for institutions of any kind to be a part of any transaction. Yet, Lemberg opines that blockchain will not eliminate institutions, but to the contrary, make them play a much larger role in it than the retail investor or the retail participant. "That's just how it is, because they simply have way too much experience and way too much liquidity," he says. "This is a whole new technology for both the institution and the retail investor, and now, the only difference is that the retail investor does not have to wait for the institution to catch up."
Lemberg goes on to note that the retail investor can now choose to operate outside of an institution, and hence start participating in deals much earlier, whether it's initial public offering-based, staking-based, investment-based or lending-based. "So, we can either go through an institution and pay a smaller fee, or we can actually do this on our own," he says. "Now, why is that so important? It's important, because institutions over the years really have stopped innovating. Now, it doesn't mean that we have stopped spending on technology or process innovation (banks do innovate), but because of the regulatory environment, the amount of innovation that they can actually produce is very limited."
While a regulated institution will innovate only within a well-defined context, Lemberg points out that blockchain is able to enable a lot more of it, "because we, as individuals, can now start creating smart contracts and projects," he says. "So, the innovation that's going to come from that world is going to get adopted, because it doesn't have to rely on an institution to make its way to the marketplace, but on that guy or girl working in the basement to create it. They now can actually put it onto the chain, instead of having to convince an institution to do it for them."
According to Lemberg, the significance of blockchain as a technology lies in the level of innovation and market access that it offers, which has never been seen before. "It certainly will never be able to be regulated to the extent that the regulators would want," he adds. "But at the same time, what's going to happen, I believe, is that institutions will pick up on those innovations. They can't do it on their own. They'll have that innovation put into a framework that will be mature and backed by the mature institution. And the ones that do deserve to sustain the marketplace will stay in the marketplace."
Lemberg's Malta-registered enterprise Nimbus, a decentralized finance platform that offers peer-to-peer lending/staking and off-exchange (the ability to exchange cryptocurrency off the exchange) is designed to grasp the power of this new potential. Nimbus' two main advantages, Lemberg explains, are in eliminating fees and being protected from hackers, as it does not hold the currency in any physical state. The future trajectory of his business will remain in decentralized finance, he explains, but the Nimbus team will focus more on working with regulators in order to create more stringent governance processes within the company's compliance processes in certain regions, starting with knowing your client (KYC) rules, anti-money laundering (AML) rules, and starting to register.
When explaining that the company's plan also includes conducting use case studies for leveraging blockchain technology as well as non-fungible token (NFT) based technology within the sectors that people actually understand, Lemberg admits that the biggest obstacle he currently faces is in their actual adoption. "It's because we care about the adoption of the actual technology overall, not necessarily a specific product," he says. "What matters is that people begin to use and track this technology on a daily basis. One of the difficulties of doing it by only providing financial securitized products and complex financial products and models is that when you're looking for a technology to get adoption, you have to teach people what is blockchain, what is cryptocurrency, what are smart contracts, NFTs, and so on. Then, you have to teach them what a complex financial product is."
To prove his point, Lemberg explains that peer-to-peer lending has enjoyed wide acceptance, mainly because it is an easy to understand concept for people. Inspired by that, Nimbus aims to thus use its case studies about the technologies that it offers to enter the regulated environment, and help banking institutions to participate in this new world. "As a company that wants to drive adoption, we'll do this by actually solving fundamental issues in several different categories, several different industries, and especially industries that people use every day," he says. "It's easier to create adoption participation from the end user, when they know the end product. And now, all they have to really learn is how to open up a wallet and how to fund an account. That's our goal in the company- to get as many people onto this technology, and to help the industries that everyone uses and loves to adopt these technologies, despite their certain fundamental issues. In parallel, we look to make a very strong foothold in the financial space, as well as the decentralized finished space."
Another area that Lemberg is interested in promoting is decentralized finance (DeFi) for SMEs in the fashion sector, who are known to often struggle to get funding from classical financial institutions, as they don't satisfy the large number of factors that are checked as a risk assessment process. "DeFi might not substitute the bank as an intermediary needed to process transactions, but it might substitute it as a source of permissionless financing," Lemberg notes. "However, if a company chooses DeFi in order to get a loan, it means that this company already uses cryptocurrency, and thus, it can transfer funds across the world in a fast, secure, cheap, and transparent way, while keeping a close track of its financial operations."
One more benefit of DeFi is that it enables highly profitable companies to increase that profit through a lending mechanism, such as his Nimbus platform. "Fashion companies performing profitably might use the excessive profit to provide direct loans to other DeFi market participants, and at the same time, differentiating their sources of income and receiving even more profit, thus increasing volume in their primary operations," Lemberg says. Platforms like Nimbus, he adds, open up cross-border action, because cryptocurrency and the ability to directly swap from one token to another bring more liquidity to a company, along with the ability to use different products and services at the same time and without any visit to centralized entities.
DeFi is also a good avenue to consider also when a fashion company decides to move its production or expand it to another country, Lemberg says, where it usually does not have any credit rating. "Nimbus might help here, since there is no definition of borders for DeFi protocols, you can use the platform as a source of finance to cover the costs of expansion abroad," he says. "Nimbus can also be used as a royalty and tax payment automated system. For example, fashion brands can use Nimbus as an automatic royalty payment system for designers, meaning that designers who created a design for shoes/suit/clothes might create an NFT token locked up under their name, and receive automatic royalties paid to them for their design being used by a fashion brand."
And the list of other possible uses of Nimbus expands grows more. "Another case might be near-field communication (NFC) chips, which are devices integrated into the design of a cloth/shoe, in order for blockchain to gather, track, and organize different types of information," Lemberg adds. "This information might be how the logistics of products are organized, how much time does it take for a piece of clothes/shoes to reach a shop or a warehouse. Also, it can be used to track other personal metrics, such as, for example, related to shoes, steps, time or location of usage and gather relevant big data."
Lemberg's expertise and understanding of both the business process and the use of technologies to maintain a streamlined, user-friendly environment comes from his time working as a business analyst on Wall Street since 1992, which included stints at Merrill Lynch, Morgan Stanley, Barclays Capital, CIBC, Bank of America Securities, and Credit Suisse. Over all these years, he has become known as an expert in data visualization, big data, and artificial intelligence for big companies, and in that sense, his most significant piece of advice for entrepreneurs is to make it a point to make use of the aforementioned technologies to their benefit, starting now. "More importantly, don't entirely rely on external consultancy companies that come in, but start initiating programs in your organization for data literacy," he adds. "That means that everyone in the team and the organization should not look at information anymore in a very static way. Every time they touch a piece of information or generate some form of data, they have to look at the generation or the act of generation of that data with the end goal, which should be creating some form of business intelligence tool or data visualization tool that the company can leverage internally in that specific department, and more so by associating all those data points across the organization."
Following this approach, Lemberg concludes, will allow business leaders to see more positive interactions and benefits for their different processes and departments. "You're going to be able to make much faster decisions, and those decisions are going to be a lot more accurate. So, that stamps for that one," he says.
"TREP TALK: Nimbus CEO Alex Lemberg's Tips For Entrepreneurs In The Blockchain Space
1. Make your blockchain business meaningful "Whenever you start up your first business, select use cases and solutions that are specific and meaningful, so do not do just a project that's going to be wrapped up in a lot of marketing in order to just drive awareness. That's where most of the failure has taken place in the blockchain space today."
2. Hire the right legal consultants "You need to make sure that the use case of what you are going after, or that the solution you're looking to provide, can be done in the jurisdictions in which you plan to work. Certainly, you'll find some jurisdictions in which you cannot do anything, but in the end, that should not necessarily be a major factor in providing the solution that you want to give to the world. So, legal compliance and regulatory compliance- get that very early."
3. Prioritize business intelligence "Make business intelligence, data, visualization, machine learning, predictive analytics, and in general, reporting, the foundational core of what you're doing, and make sure that you support data literacy across your organization. Leverage business intelligence from day one all the way through to the end of your project, both for internal purposes and for client-facing or any other external purpose, so that you can present some level of transparency to whoever you're dealing with."
4. Have pride in doing things by yourself "This space isn't just decentralizing innovation, but it's also decentralizing the need to do things on your own, in any capacity. I would highly recommend that you get partners quickly early. Everyone wants to network, but network with a purpose, and actually help each other. If you want to succeed and grow very quickly, you'll be able to do that only by leveraging other people who are already in the space in a particular region."