Token Approval
A token approval lets a smart contract spend a set amount of your tokens. It stays active until it is used up or revoked.
What Is a Token Approval?
On Ethereum and other EVM chains, a token approval (or allowance) is a permission recorded on the token contract: it lets a named spender, usually a DeFi contract, move up to a set amount of an owner's ERC-20 tokens. Many apps request an unlimited amount so users don't have to approve again.
Approvals stay active until they are spent or revoked. If an approved contract is malicious or later exploited, it can move the approved tokens without any new signature. Off-chain permit signatures can grant an allowance too, without an on-chain transaction, and are a common tool of wallet drainers.
A hardware wallet signs approvals like any other transaction; it protects only if the device shows the spender and amount clearly and the user reads them. Approvals can be reviewed and revoked with block explorers' approval checkers.
Ethereum is a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Its native cryptocurrency is Ether (ETH).
Read full definitionThe EVM (Ethereum Virtual Machine) runs smart contracts on Ethereum and on compatible chains, which share its address format and tooling.
Read full definitionA token is a digital asset on a blockchain that represents value, ownership, utility, or access rights. Examples include ERC-20 tokens on Ethereum.
Read full definitionDeFi (Decentralized Finance) refers to a set of financial services, such as lending and trading, built on blockchain technology without traditional intermediaries like banks.
Read full definitionERC-20 Token is a fungible token standard on the Ethereum blockchain. It defines rules for creating, transferring, and managing tokens uniformly.
Read full definitionA wallet drainer is a phishing kit that tricks users into signing approvals or transfers that empty their wallet.
Read full definitionReal-World Examples
Example 1: A user approves unlimited USDC for a swap contract. A year later the contract is exploited and the remaining balance is drained.
Example 2: A user approves only the exact amount for a single swap, so nothing remains for the contract to spend afterwards.
A stablecoin is a cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar or backed by reserves.
Read full definitionIn cryptocurrency, a swap is the direct exchange of one token for another on a blockchain, often via decentralized exchanges (DEXs) without intermediaries.
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