Financial Infrastructure N-Squared to N

The squared problem

Building a genuinely global financial product used to require building country-specific infrastructure for every market a company wanted to enter: local banking rails, local compliance and identity requirements, local payout infrastructure, local currency handling, and local settlement calendars and cutoffs, each maintained separately. If a company wanted to operate in a given number of countries, it needed something close to the square of that number in point-to-point connections, or at minimum a separate integration per country, each carrying its own ongoing maintenance burden, and the next company that wanted to do the same thing had to build all of it again from nothing. Zach Abrams states the problem plainly: "Before Bridge, if you want to expand into a bunch of different countries, you had to uniquely build your US infrastructure, uniquely build your European infrastructure, uniquely build your Mexican infrastructure. And the next company that came around had to do the same thing."¹

The N solution

Stablecoins collapse that complexity because each currency only needs to be tokenized once. One issuer builds a dollar-denominated stablecoin. A separate issuer builds a naira-denominated one. A large bank builds a yen-denominated one. From that point forward, any company that wants to operate globally simply picks up whichever stablecoins it needs and plugs them in. Abrams frames the shift directly: "One person just needs to build a US dollar stablecoin, and then you throw it into the wallet and now you have a US balance. Then someone else builds a naira stablecoin and now you have naira. Someone else, JPMorgan, JPY stablecoin. Previously it was N-squared, and now it's just N." The financial stack effectively becomes open-source at the level of the currency itself: a company building a genuinely global product no longer has to build the underlying rails, it composes existing stablecoins instead.

Why it matters structurally

For a new company, this replaces years of market-by-market expansion, each requiring its own local banking partnerships, with the ability to launch globally close to day one by simply accepting or issuing the relevant stablecoins, since the infrastructure layer is already solved. For an established fintech company, it changes the competitive picture entirely, since the earlier generation of large consumer financial products, companies such as Revolut and Klarna, took decades to build their underlying stack piece by piece, while a new entrant today can assemble an equivalent stack in roughly a year because every underlying layer is already built and composable.¹ This effect is especially visible in fragmented regions where no two national markets share the same regulatory or banking infrastructure, since a stablecoin-based approach collapses what used to be a separate infrastructure build per country into a single, reusable layer.

What N-squared to N actually requires

The reduction to N only holds if the resulting stablecoins are genuinely interoperable with each other, meaning that moving value between one company's dollar stablecoin and another's, or between a dollar stablecoin and a naira one, has to be close to seamless. That requires deep liquidity between different stablecoins, which today remains thin outside of a small number of major currency pairs, confidence in each issuer's backing through audits and regulatory clarity, and genuine technical interoperability at the orchestration layer connecting the different tokens to one another. The current constraint is that stablecoin foreign-exchange markets are efficient at small transaction sizes but widen meaningfully at larger sizes, the opposite of how traditional foreign exchange markets typically behave, tightening rather than widening as size increases, an asymmetry expected to resolve as the underlying markets deepen over time.

A second, independent statement of the same thesis

A separate account of the same idea restates it from the institution's side rather than the builder's side, describing conventional finance as expanding jurisdiction by jurisdiction, with each institution separately integrating local banking relationships and rails, an N-squared structure, while stablecoins flip the direction of integration so that every country instead integrates against one global platform, an N structure, because open blockchains provide worldwide reach by default rather than requiring it to be built market by market. That account adds two further points the builder-side framing does not emphasize on its own. Near-instant settlement destroys a category of business built on exploiting settlement delay, since batch settlement, often processed once at the end of a day, forces companies to hold larger cash reserves against counterparty risk, while near-real-time settlement lets them run leaner and competes away float-based revenue that functioned as a tax on the parties waiting for their money to move. And the resulting reduction is politically uneven, since the vast majority of the resulting stablecoin market is dollar-denominated, meaning the shift from N-squared to N may simultaneously reinforce the dollar's global position while raising real displacement concerns for smaller national currencies, producing divergent responses in which some jurisdictions race to become stablecoin hubs while others remain far more cautious.