One-hot encoding represents each category of a categorical variable with a binary variable. Hence, one-hot encoding of highly cardinal variables or datasets with multiple categorical features can expand the feature space dramatically. To reduce the number of binary variables, we can perform one-hot encoding of the most frequent categories only. One-hot encoding of top categories is equivalent to treating the remaining, less frequent categories as a single, unique category, which we will discuss in the Grouping rare or infrequent categories recipe toward the end of this chapter.