Stablecoin growth stalls after October shock as Base leads transaction volume: ARK Invest

A new report from ARK Invest highlights a significant shift in market dynamics, noting that the overall stablecoin market capitalization has entered a period of stagnation following a substantial liquidity shock experienced in October. Total stablecoin market cap growth year-over-year has slowed to just 1.2%, failing to regain the peak levels observed in Q3. This slowdown is attributed primarily to regulatory uncertainty and reduced institutional appetite for risk-parity assets.

Despite the stalled growth in underlying collateral, the report notes an aggressive reallocation of transaction volume toward high-throughput Layer 2 (L2) solutions. Specifically, Coinbase’s Base network has emerged as a dominant force in daily transaction metrics, consistently surpassing older L2 competitors like Arbitrum and Optimism in non-financial transaction counts.

ARK Invest research suggests that Base’s success is driven by two key factors: extreme low-cost execution and a heavy concentration of consumer-facing applications, particularly decentralized social media and speculative memecoin trading. During the reporting period, Base captured approximately 35% of all aggregated L2 transaction volume, demonstrating a strong product-market fit for applications prioritizing low latency and high user frequency. This indicates that while the entry of new capital into the crypto ecosystem (measured by stablecoin growth) has slowed, the velocity and efficiency of existing capital are rapidly improving through optimized scaling solutions.

Source: Stablecoin growth stalls after October shock as Base leads transaction volume: ARK Invest