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According to Dr. Wilker, the nano-cybrid is a combination of genetic engineering and nanotechology designed to revert the now-robotic Cylon race back to its reptiloid form.
The nano-cybrid feeds on Cylon energy, the wavelons that consist of the Cylon's machine consciousness, which triggers a transformation of the substance and any nearby matter to form an organic reptiloid tissue that is similar to the living Cylons of old.
The nano-cybrid does not work as designed. Any Cylon that comes in contact with it becomes a larger hulking monsterous chaotic beast. In effect, the nano-cybrid is more of a predator.
Abbadon, an IL-series Cylon and Viceroy and Regent of Tessida, wants the nano-cybrid completely destroyed. While Apollo wants to weaponize the substance, his father has second thoughts on bringing about a type of "apocalypse" in the genocidal destruction of a race, albeit robotic (Battlestar Galactica: Cylon Apocalypse 2).
The Colonials use the nano-cybrid against the Cylons very effectively, leaving Abbadon no choice other than to destroy the Cylon outpost, destroying the nano-cybrid with him (Battlestar Galactica: Cylon Apocalypse 4)