Token approval
A token approval is a transaction that lets a smart contract spend your tokens. Until you revoke it, the contract can move them without asking you again.
How it works
ERC-20 and similar tokens do not flow into a DeFi app on their own. First you sign an approve: "contract X may take up to N of my tokens." Then the DEX, lending protocol or bridge pulls the amount it needs when you trade. That is why swapping a token the first time takes two transactions.
Many apps ask for an unlimited approval by default so you do not pay gas for an approve every time. Convenient, but if the contract gets hacked or was malicious from the start, it can take every token of that type from your wallet, even a year later.
Approvals stay on-chain until you revoke them. You can view and revoke them in a block explorer or an approval-checker service; revoking is also a transaction and costs gas. NFTs have a similar mechanism (setApprovalForAll), and permit signatures grant the same access without any on-chain transaction.
You swap 100 USDC for ETH on a DEX. Your wallet suggests an unlimited approval. You change the limit to 100 USDC and confirm. Six months later the DEX contract is hacked: people who gave unlimited approval lose all the USDC in their wallets, while your approval is already used up and there is nothing to take.
The main mistake is clicking through approvals and piling up unlimited permissions for dozens of sites over the years. Set the limit to the trade size, read in your wallet which address and token you are granting, and revoke old approvals every few months. Keep large amounts in a separate wallet you never connect to sites.
Questions and answers
What is a token approval in simple terms?
It is permission for a smart contract to take your tokens. Without it a DEX or other protocol cannot trade that token for you.
Is an unlimited token approval dangerous?
It is a risk: if the contract is malicious or gets hacked, it can drain every token of that type. Limiting the amount is safer.
How do I revoke a token approval?
Use your network's block explorer or an approval-checker service: connect the wallet, find approvals you no longer need and revoke them. Each revoke costs a small gas fee.
Related terms
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Updated: 2026-10-19