Should you invest in stablecoins? Are they really stable?

Is it safe to invest in stablecoins for better yields on your crypto portfolio?Dmitry Demidko, UnsplashIs investing in stablecoins a good way to grow your crypto portfolio?Although stablecoins have been around for many years, it has never been a bone of contention within the crypto community and regulators before.So, let’s understand what are stablecoins and why is it much talked about these days.What Are Stablecoins?As we know, cryptocurrencies are volatile, and their price tends to fluctuate on a real-time basis. For example, the value of the first cryptocurrency Bitcoin has been historically volatile and has witnessed extreme swings.But stablecoins share many powers of other cryptos minus the volatility. Stablecoins are pegged to a range of assets from fiat to gold or another cryptocurrency.Also read: Staking vs Yield Farming: What’s the best way to earn passive income from cryptocurrencies?Stablecoins were created to overcome the price volatility of cryptocurrencies like Bitcoin, Ethereum. As there is no mechanism to determine the real-world value of these cryptocurrencies, safe investors tend to embrace secure options like stablecoins.At the time of writing this blog, the market capitalization of the top stablecoin token surpassed $118,190,652,908 on CoinMarketCap, with Tether (USDT) leading the list, followed by USD Coin, Binance USD, DAI, and Terra USD in the top five.We can categorize stablecoins into three categories depending on the collateral they are backed by:These stablecoins are pegged to the price of US dollar. Tether (USDT), Gemini Dollar (GUSD), and USD Coin (USDC) are few examples.These stablecoins are based on commodities like gold, silver, oil, real estate, etc. These coins will appreciate in value in parallel to the increase in value of the underlying asset. Popular examples include PAX Gold (PAXG) and Digix Gold (DGX).These currencies are pegged to other cryptocurrencies as collateral. As the value of cryptos is not stable,…