Token Approval
Granting a smart contract permission to spend tokens from your wallet.
Explained Simply
Before a DeFi protocol can interact with your tokens, you must 'approve' it — giving the smart contract permission to move tokens on your behalf. Many approvals are set to unlimited by default, meaning the contract can access all your tokens of that type forever. This is risky if the contract is compromised. Best practices: approve only the amount needed, regularly review and revoke old approvals, and use tools to monitor what contracts have access to your wallet.
Example
Before swapping USDC on Uniswap, you approve the Uniswap router to spend your USDC. If you set unlimited approval, it can access all your USDC.
Related Tools
Put this knowledge into practice with these tools.
This content is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for advice specific to your situation.