Varactor diodes in LC oscillators do not cause frequency modulation at half the frequency due to their inability to operate effectively at high frequencies, behaving more like capacitors whose capacitance varies with DC voltage. Even power diodes can function as varactors because their large capacitance makes them poor rectifiers at high frequencies. Some users suggest that using two varactors back-to-back can prevent phase modulation in RF circuits. Observations of oscillator outputs with varactor diodes show clean sine waves, indicating no distortion from modulation. Overall, varactor diodes maintain stable performance in oscillator applications without introducing frequency modulation.