Why do you need to stake on Polkadot?

Staking is a term when you lock your coins and receive daily "dividends" as a reward. This principle applies to Polkadot too, you can lock N amount of coins and every day receive percentage of what you locked up. Since Polkadot has NO token supply limit (there can be an infinite amount of coins) it has an inflation/reward mechanism to keep up the coin economics.

Inflation on Polkadot is around 9-10% at the moment. What it means is if you have 100 coins now, in one year it will be devalued by 10% -> 90 coins. Staking reward is 13% -> if you lock 100 coins for staking, in one year you will have 113 coins. Nice! But it is not that easy... Technically you get only 3%. Remember inflation? The real formula should be -> net profit = reward - inflation -> 13% - 10% = 3%.

Ha! For Polkadot it is crucial to have > 50% of tokens staked to keep up with inflation. Since depending on activity of the network inflation can reach up to 100% which will make your DOTs... completely devalued.

What I want you to remember is that Polkadot supply is INFINITE. There is no "10 million tokens only" rule, no. That's why it is crucial to stake majority of your tokens to be always in +zone. How to stake? Either using official Polkadot.js.org web app or using Ledger. I'm not in favour of Kraken etc. because you are not a custodian of your private key, and if you read all small-tiny-micro agreement paragraphs, it says that they are not liable for any coin loss.