According to Polkadot's blog post, "Nomination pools will be handy to the members who would like to participate in the staking system with a stake much lower than the dynamic min-active nomination threshold on the network."
Polkadot Network added support for Nomination Pools to allow smaller investors to verify blockchain transactions and earn staking rewards.
Investors can create Nomination Pools by depositing Polkadot (DOT) tokens. The initial deposit acts as the pool’s stake. Other investors can increase this stake by depositing their assets. Each Nomination Pool within the Polkadot Network functions as a single nominator account and can have a maximum of 256 members.
The pool’s creator is responsible for its overall management as the ‘Nominator.’
The Nominator is required to assign another account as the ‘State-Toggler.' The State-Toggler will be responsible for switching the pool’s state between ‘open,’ ‘blocked’ or ‘destroying.’
The pools will also feature the third account as a ‘Root’ member who can change the Nominator and State-Toggler. The Root member is authorized to perform the same actions as the Nominator and the State-Toggler.
The staking rewards will be split among the pool’s members in proportion to their contribution to the pool’s stake. It is worth noting that in case the Validator of a Nomination Pool gets slashed, the pool’s members will also lose a fraction of their assets.
The Polkadot council is considering rewarding the Nominators in $DOT to incentivize them to create trusted pools.
