Alice: Do you remember how the villain from a month ago always said how he wanted to kill us?

Bob: Hm-mm?

Alice: Well, this new villain wants to kill us ... and murder our dog, too!

A solution could be:

Avoid falling into the trap completely

Don't set up a crescendo. Decide what's the story arc you wanna tell and stick with it. Make the story compelling, build interesting characters, and when the story eventually ends and the big bad is defeated, you'll still have your characters left.

They don't have to face a bigger challenge to be interesting - the reader that followed you up to this point will already be invested in their lives, their feelings, their personal struggles. Sure thing, if you're writing an action series or an epic fantasy it will be difficult - if not outright impossible - to build a second story arch based on character introspection alone, but this doesn't keep you for carrying on this kind of narration.

Maybe there will be another challenge, but you don't need to set up an escalation. The other challenge may be just different in nature.
Spoiler about Sanderson mistborn series (The Final Empire - the Well of Ascension) ahead:

In The Final Empire, the main characters effectively dethrone an evil, immortal almost god-like emperor - the stakes being pretty high.

It's true that in the following book the stakes do get higher (as there are hints of a prophecy and things do get worse), but I would argue that the Well of Ascension is mainly focused on the difficulties of running the capital city after the empire is gone.
Now, running and protecting a city shouldn't be more difficult than killing an immortal emperor-god, and yet it's interesting since there are a lot of themes involved, and space to explore characters already presented in the first book.

So, don't set up a worse challenge - chances are that the first challenge was pretty difficult in the first place - set up a different one. Better still, carry your character development forward.

Your hero may as well be an immortal superhero at the end of book 1, but he/she will still have to face personal issues inherently connected to being human (and if he/she's not human, with being alive).

A lot of story arcs end with the hero getting the love interest and stomping the evil guy, but few tells us what happens when you have to keep a relationship (compare this as how few books deal with the struggle of administrating the world and preventing an evil guy from resurfacing).

Ask yourself:

Are my characters all right with everything that happened in story arc 1?
Do they have some unfinished business to attend to?
Did they meet their goals? If so, are they content with their new life, or do they strive to some other goal?
Are there still problems in need of fixing in my setting? Are there political struggles? Is there space for improvement? If the answer is no, why is that? Did I overlook something?

Also, remember that story arcs don't need to be close to each other, at least not necessarily. That's something that happens a lot in tv series, cartoons or animes, but it's just because it maximizes viewer attention without having to deal with uneventful periods or character growing up, or getting older, or changing alltogether. If you feel like it, you can put a time gap of years, even, between a story and the next - just remember that your characters will be a little different as time passes.

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