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January 30, 2023

The Polymesh Association welcomes another new hire! Meet Nick Cafaro, Head of Product

Joining the Polymesh team as Head of Product is Nick Cafaro, one of the founding architects of Polymesh. Discover how he plans to maximize blockchain's potential for finance with Polymesh.

The Polymesh Association is pleased to welcome another “new” hire! 

Joining the Polymesh team as Head of Product is Nick Cafaro, one of the founding architects of Polymesh. 

Prior to his involvement with Polymesh, Nick spent 15 years in financial services with Canada’s three largest banks, working everywhere from commercial banking to head office roles to wealth management and global asset management roles. In this interview he discusses why he jumped into blockchain, the transformative potential he sees in the technology, and how he intends to bring this vision to life with Polymesh. 

What’s your role with the Polymesh Association?

Nick: As Head of Product, my primary focus is to ensure that the team behind Polymesh is doing all the right things to get the blockchain into the right hands: the institutions and market participants that will benefit from tokenization.

I see this as a dual-layered process. Part of it involves listening to stakeholders, developers, and users, and then making sure that the product meets and is capable of delivering on their needs. The first priority is that the product does what it needs to do, and listening to others is critical for this.

Then there’s an overarching “crystal ball” piece. It’s not enough to focus on current needs when shaping the roadmap: we also need to anticipate future needs; the things that might come about through the changing regulatory landscape or technological innovation. 

Blockchain is in its infancy on both of those fronts, so future-forecasting – already inherently unpredictable and uncertain – is especially tricky. Part of my role is to figure out what on the horizon is necessary to incorporate into the product and how. This requires discretion; as much as it’s important to listen to the industry, it’s also important to know when to drown out the noise. 

Luckily, Polymesh is well-positioned to take advantage of changing regulations. The compliance engine is one example: we designed the engine so that compliance rules can be changed by users as regulations evolve.

What is your history with Polymesh? 

Nick: I’ve been involved with Polymesh since its early days of development. As Product Manager at Polymath, I was working through the design and launch of Polymesh and involved in most of the core features of the blockchain. For example, I helped the engineering team design the settlement capabilites for Polymesh. I also helped to launch the testnet and the incentivized testnet. 

Then as now, my focus was on making sure that the blockchain was designed in a way that could meet the business requirements of financial services companies. 

Why did you leave financial services for blockchain? 

Nick: While on a team looking into tokenization, I became enamored with the technology but realized it needed additional capabilities to serve enterprise clients. In that role, I realized we would be consumers of the technology; we would not be improving the infrastructure. I left the financial services world to work directly with blockchain and banks to figure out how to migrate financial services to the blockchain for many banks, as opposed to just one.

I’ll never forget the first time I did an Ethereum transaction. It was around 10:30pm at night, and I could see that the transaction was instantly settled and without intermediaries. It was immediately mind-blowing to me, especially because I understood the number of different interfaces and parties normally involved in sending money between banks. I ended up leaving the bank to work in blockchain shortly after, excited by the possibilities to expand financial services. 

That feeling hasn’t stopped. I’m an avid listener of the Zero Knowledge (ZK) Podcast and constantly think about how incredible zero knowledge technology is. It’s mind-boggling how it works and the huge impact it’s having on blockchain. Just as everyone is talking about how ChatGPT is going to impact industries, I’m fascinated by how zero-knowledge technology can impact ours and excited to figure out how to leverage it to improve things such as scaling and privacy on Polymesh.

What’s one problem that Polymesh solves for the financial industry? 

Nick: One thing that’s super interesting to me is the direct access that you have with the asset and counterparty to a transaction. From a company’s perspective, having the ability to interact directly with your counterparty, whether it's an individual or another company, is unbelievably powerful because you can control the full end-to-end customer experience.  Once you layer on smart contracts, which we now have on Polymesh, you can start to stitch together entire networks where you can track the exchange of value in real-time all the way through the customer journey. 

From a financial lens, this means the possibility of financing without an intermediary, or the ability to interact with the financial system directly. You can work with a financial instrument without the waiting or not knowing involved in these traditionally hidden systems. Instead, everything is fully transparent. 

Let’s take custody as another example. With Polymesh, custodians can safeguard assets while those assets remain in a user-controlled wallet; still your keys still your crypto. This unique feature of Polymesh unlocks the ability to directly distribute entitlements to shareholders and reduces reconciliation costs required to service assets. 

Polymesh will also allow businesses to connect more directly to investors while allowing investors to more directly engage and relate to the companies they’re investing in. Polymesh thus very much enables the vision of stakeholder capitalism, where companies seek long-term value by serving the interests of their stakeholders. 

What feature of Polymesh are you excited to work on? 

Nick: I’m definitely excited to work on non-fungible tokens or NFTs. At the moment everyone seems to only be thinking about NFTs for collectibles and art, but there’s high applicability in financial settings. I want to make that an area of focus as there are many untapped use cases there. 

With my background in commercial lending, one thing I’d like to see is the on-chain accounts receivables lending, where you essentially tokenize invoices as an NFT and use it as collateral for a loan. Right now the industry is focused a lot on investment capital, but I think working capital solutions are bigger in terms of size and more interesting. I’m excited to help bring those examples on-chain. 

What book, podcast, or online material about the industry had the most impact on you? 

Nick: Crossing the Chasm by Geoffrey Moore; it’s standard reading in most MBA programs these days.  

Moore details how technology products and services can successfully move from early adopters to mainstream customers. He argues that in order to cross the chasm, a company must understand the specific needs and concerns of mainstream customers, and tailor their marketing and sales efforts accordingly. He also emphasizes the importance of building a "beachhead" market, a specific niche where a product can gain traction before expanding to the broader market.

The book makes you think more critically about your product  and how we ultimately need to ensure we think not just about the people who are comfortable with the technology today, but those who are not yet comfortable. We need to focus on what applications will signal to other markets that the product is safe to use for their customers. 

For the tokenization industry, this means we need to figure out not just how blockchain can improve the financial industry but what the intermediate steps and use cases are that will bring that value to customers today and allow it to reach the maturation necessary to be adopted in regulated institutions. We need to think about the ways we can get customers comfortable enough with the technology that they themselves begin to shift the technology towards those use cases themselves. 

Part of this involves recognizing that certain sets of customers will see credibility in the technology only if it’s adopted by certain companies and industries. If the technology is currently only being used for CryptoKitties or monkey jpegs, it’s not that credible – at least not to the companies and industry we’re trying to tap into. 

Lastly, is there anything you’d like to share with the Polymesh community? 

Nick:  I’ll say that the recent drama around FTX has really highlighted the importance of regulations in the space. I’m excited to bring my domain expertise in financial services to the Polymesh Association and get involved with a blockchain that’s working with regulated entities.

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