Allowance
Definition
An allowance is the maximum amount of a token a spender contract is permitted to move from your address under a prior approval.
In the ERC-20 token standard, an allowance is a stored value that answers the question: how much of my tokens is this particular spender allowed to move? It is set by a token approval and lives in the token contract as a mapping from owner and spender to an amount. Each time the spender calls transferFrom, the allowance decreases by the amount moved.
Why it matters
The allowance is the precise measure of your exposure to a given contract. An allowance of exactly the amount you intend to trade limits risk to that amount. An unlimited allowance, often the default an app requests, means the spender can move your whole balance of that token at any time, now or in the future. Reviewing allowances tells you, at a glance, which contracts could touch your funds and for how much.
Common misunderstanding
People often confuse the allowance with the amount actually spent. Approving an allowance does not move any tokens by itself; it only sets a ceiling. The tokens move only when the spender later calls transferFrom. A second misconception is that a large allowance is harmless as long as the app is trustworthy today. Contracts can be exploited or upgraded, so a standing unlimited allowance remains a risk. Setting an allowance back to zero (revoking) is how you close that exposure. Periodically reviewing your active allowances gives you a clear picture of which contracts could still move your tokens.
Related terms
Note: CamoCrypt is security & education only — no prices, no predictions, no investment advice. Verify every address and contract yourself; we cannot recover lost funds and neither can anyone who contacts you claiming they can.