Should you invest in Stablecoins?

Yes, but possibly no. To begin with, it is important to clarify what a good financial investment means to us. For some, interest rates of 2% at your local bank is considered a good financial investment. To hedge funds, returns rise to about 20-25% before it is considered a good financial investment. For the sake of argument, let’s say that anything above what the market would give you at relatively low risk is considered a good investment.
 
Due to the fact that stablecoins involve diving into the highly volatile cryptocurrency space, the risks involved are bound to be higher — meaning that that base returns should reflect that. The simplest and least risky method for you to make a good return on your investment into stablecoins would be lending them out, for which you can make about 6% interest. This is significantly higher than what banks offer you, but not nearly as high (nor as exciting) as using them as trading assets to speculate.
 
So, if you are happy with 6% — stop reading here. But if you are feeling like this doesn’t tickle your risk seeking nerve endings enough, keep reading.
 
Betting on stablecoins can be highly profitable in the long run, but the key words here are “can” and “long.” “Can” implies that if you bet against the right macro trends, stablecoins will be a key catalyst to insure your risk in cryptocurrency. This is the “long” bet that most crypto investors are making. If a doomsday scenario occurs, central banks will be affected drastically by their governing country’s situation. This can cause fiat currencies to plummet, and your wealth along with it. But, if you have your wealth in Bitcoin, the idea is that you are protected against these black swan events. Stablecoins offer something in between, more or less the best (and worst) of both worlds — a hedge that gives you time and power to decide where you want your wealth to be allocated.
 
The long view in this case also depends on macro social, economic and geopolitical trends. As global digital transactions increase, so will the demand of stablecoins, and with it the number of tokens in circulation. If you leverage your stablecoins, depending on the underlying blockchain and applications available to you, by staking or providing liquidity then you can also earn some of the network’s transaction fees. The more demand for your stablecoins, aka transactions, then the more fees you can ultimately earn.