Understanding Approval in Ethereum Smart Contracts
When interacting with Ethereum smart contracts, users often encounter the approval operation—a concept that puzzles many newcomers. This article explains the technical essence behind approvals and their role in decentralized applications (dApps).
Why Is Approval Necessary?
Approval is a transaction that grants a smart contract (Contract A) permission to manage specific amounts of a user’s ERC-20 tokens. For example:
Case Study: NEST Oracle Miner
Bob, a NEST oracle miner, wants to quote an ETH/USDT price. To do this, he must deposit 10 ETH and 1,600 USDT into the quotation contract. Before proceeding, Bob must approve the NEST contract to access his USDT. This ensures the contract can execute trades involving his USDT if validators accept his quote.
Key Technical Insights
ETH vs. ERC-20 Tokens
- ETH: Native to Ethereum, transfers automatically notify the target contract. No approval needed.
- ERC-20 Tokens: Transfers only update the token contract’s ledger. Target contracts aren’t notified, requiring explicit approval.
The Two-Step Approval Process
- Step 1: The approval transaction informs the ERC-20 contract that Contract A may withdraw up to X tokens.
- Step 2: Contract A triggers the actual transfer only when its logic requires it. Approval ≠ guaranteed transfer.
Risks of Over-Approval
Many dApps default to granting unlimited token access to contracts, exposing users to risks if the contract is compromised. Solutions include:
- NEST DAPP: Features an authorization management page to revoke approvals.
- imToken: Displays clear authorization prompts and offers a dedicated DAPP for managing approvals.
FAQ Section
Q1: Why does approval cost gas?
A1: It’s a blockchain transaction updating the ERC-20 contract’s permissions, requiring miner fees.
Q2: Can ETH transfers skip approval?
A2: Yes. ETH’s native status ensures contracts receive transfer notifications automatically.
Q3: How to avoid over-approval risks?
A3: Use tools like imToken’s approval manager or revoke unused permissions via NEST’s interface.
👉 Best Practices for Secure Ethereum Transactions
Conclusion
Approvals are critical for secure ERC-20 interactions but require cautious management to mitigate risks. Always monitor and adjust permissions based on your usage needs.