Many new Ethereum users encounter the "approval" operation when interacting with smart contracts for the first time—often feeling confused.
Why is approval needed? Why does it require a separate transaction without transferring assets, yet still incur gas fees?
This article explains the technical essence of token approval in Ethereum smart contracts.
Why Token Approval Exists
When interacting with smart contracts involving token transfers (e.g., ERC20 tokens like USDT), users must first approve the contract to access their tokens.
Example: NEST Oracle Miner Case
- Scenario: Bob, a NEST oracle miner, quotes an ETH/USDT price by depositing 10 ETH and 1,600 USDT into the报价合约.
- Approval Needed: Bob must approve the NEST contract to access his USDT. This allows the contract to execute USDT transactions (e.g., when validators "eat" the quote).
How It Works:
- The approval is an on-chain transaction (paid via gas fees). It informs the USDT contract: "Contract A can withdraw up to X USDT from my wallet."
- Later, if Contract A’s logic requires USDT, it pulls the approved amount from the USDT contract.
Key Insight: Approval doesn’t trigger an immediate transfer—it merely grants permission for future transactions.
Why ETH Doesn’t Need Approval
Technical Difference:
- ETH: Native to Ethereum, transfers to contracts must include a receiving method (e.g.,
payable). The network enforces this. - ERC20 Tokens: Transfers only update the token’s internal ledger. The target contract isn’t notified unless the token calls a contract method.
Thus, ETH interacts directly; ERC20 tokens require explicit approval.
The 2-Step Approval Process
Approval Transaction:
- Informs the ERC20 contract: "Contract A may withdraw X tokens later."
- Gas fee applies.
Execution (Conditional):
- Only if Contract A’s logic triggers a token transfer, the ERC20 contract releases the tokens.
- No transfer occurs if the contract doesn’t request it.
Risks of "Over-Approval"
Many contracts request unlimited approval (e.g., approve(max_uint256)) to avoid repetitive approvals. This poses risks:
- If Contract A is hacked or malicious, all approved tokens could be stolen.
Solutions:
- NEST DAPP: Provides an authorization management page. Miners can revoke approvals when inactive.
- imToken Wallet: Displays clear approval prompts and offers a dedicated DApp to manage approvals.
FAQ
Q1: Can I skip approval for ERC20 tokens?
A: Technically yes—if the token contract enforces a "transfer-and-call" logic. But most ERC20 tokens avoid this for simplicity.
Q2: How do I check active approvals?
A: Use tools like Etherscan’s Token Approvals page or wallet-specific DApps (e.g., imToken’s approval manager).
Q3: Is approving small amounts safer?
A: Yes. Limit approvals to the exact amount needed (e.g., 1,600 USDT instead of unlimited).
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Final Notes
- Revoke unused approvals to minimize risks.
- Always verify contract addresses before approving.
- Prefer wallets/DApps that offer granular approval controls.
References:
- imToken’s Guide to DApp Approvals
- NEST Oracle Overview