Token approval
Definition
A token approval is an on-chain permission letting a smart contract move a specified amount of your tokens on your behalf later.
On networks like Ethereum, ERC-20 tokens are moved by contracts through a two-step pattern. First you approve a spender contract, which records an allowance: the maximum amount it may move. Later, the contract calls transferFrom to move up to that amount. A token approval is that first step. It is a real transaction that you sign and that costs gas.
Why it matters
Approvals are what let decentralised exchanges and other apps trade or manage your tokens without you signing every internal step. But an approval persists until it is used up or revoked. Many apps request an unlimited approval by default for convenience, which means the contract can move your entire balance of that token at any future time. If that contract is malicious or later compromised, the standing approval can be abused.
Common misunderstanding
Users often believe an approval is a one-time action that ends when the swap completes. It does not; the allowance remains on-chain afterwards. Another misconception is that revoking is unnecessary. Reviewing and revoking stale approvals, for example through a block explorer or a reputable approvals tool, limits how much a single contract can ever touch. Approving a token is also different from a permit signature, which grants an allowance via a signed message rather than an on-chain transaction. Approving only the amount you actually need, rather than accepting an unlimited default, is a simple way to keep this exposure small. Many wallets now let you edit the requested amount before signing.
Related terms
Frequently asked questions
Does an approval expire after I swap?
How do I remove an approval I no longer need?
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