Token Approval

A token approval is the permission a wallet grants a smart contract to move a specific token on its behalf. Almost every decentralised exchange, lending market or NFT marketplace needs one before it can trade or transfer your balance. The risk is that many interfaces request unlimited approval by default, so the contract keeps the right to move your entire balance of that token indefinitely, long after the trade you approved is finished. If that contract is later exploited, or was malicious to begin with, the approval is the door the attacker walks through. Good practice is to approve only the amount you need, review what you are signing rather than clicking through, and periodically revoke stale approvals using a revocation tool for the chain you use.