Technical Definition

Token Approval

Permission you grant a smart contract to move a specific token from your wallet on your behalf.

By Crypto University Editorial
BlockchainTransactionWallet

✦ Key Insight

Old approvals are a standing liability. If an approved contract is later exploited, the attacker can use your existing permission to drain that token without any further action from you.

✕ Common Misconceptions

Accepting unlimited approvals by habit. Set a finite amount where the interface allows it, and audit and revoke approvals periodically.

Detailed Explanation

Before a decentralised exchange can swap your tokens, you must approve its contract to spend them. That permission persists after the swap and remains valid until you revoke it. Many interfaces request unlimited approval by default because it saves gas on future trades.

In Practice

“A trader used a protocol once a year ago with unlimited approval. The protocol is exploited today, and their tokens are taken via that dormant permission.”

Dig Deeper

Wallet

Software or hardware that stores your private keys and lets you sign transactions.

Token

An asset created by a smart contract on an existing blockchain rather than being that blockchain's native currency.

Blockchain

A shared, append-only record of transactions maintained by many independent computers at once.

Transaction

A blockchain transaction is a signed or authorized instruction that changes blockchain state or transfers value when accepted by the network.