Skip to main content

Approvals on ElectroSwap

When using decentralized exchanges (DEXs) like ElectroSwap, you may have noticed that before you can swap tokens, you must first "approve" the transaction. This approval step is crucial to enable secure, decentralized trading on the blockchain. But why is it necessary, and what does it mean for your tokens? Here we’ll break down why approvals are required on ElectroSwap, how they work, and best practices for managing token approvals.

Understanding Token Approvals​

In the Electroneum ecosystem (and other EVM-compatible blockchains), tokens follow the ERC-20 standard, which dictates how tokens can be transferred, approved, and interacted with. For a DEX like ElectroSwap to facilitate swaps on your behalf, it needs temporary access to the tokens in your wallet to execute the transaction. This access is granted through a process called “token approval.”

info

Approvals are required on all decentralized exchanges and are not unique to ElectroSwap

What Is A Token Approval?​

Token approval is a process where a user (you) grants permission for a smart contract (such as ElectroSwap’s swap contract) to spend a specified amount of tokens from their wallet. This approval does not transfer tokens but rather allows the specified contract to initiate transactions on your behalf.

In practical terms, when you approve a token for ElectroSwap:

  1. You authorize ElectroSwap’s smart contract to transfer tokens out of your wallet.
  2. You can set a specific limit for how many tokens the contract is allowed to handle or grant “unlimited” access for convenience.
  3. This approval can be revoked or adjusted later using blockchain explorers or wallet interfaces.

Why Is Approval Necessary?​

The Electroneum blockchain is designed with a high level of security and user control in mind. Without explicit approval, smart contracts cannot access or move tokens from your wallet. This design prevents unauthorized access and keeps control firmly in the user’s hands. By requiring approval, ElectroSwap ensures that:

  1. User Control: Only you can grant permission to use your tokens, ensuring complete control over your funds.
  2. Security: Approvals add a layer of security. Even if you connect your wallet, ElectroSwap cannot access or transfer tokens without your authorization.
  3. Transparency: Every approval transaction is recorded on the blockchain, making it clear who has permission to interact with your tokens.

How It Works In Practice​

Let’s break down how approvals work in the context of a ElectroSwap transaction.

  1. The Initial Approval Step

    • When you initiate a swap on ElectroSwap, the platform will prompt you to approve the token you want to swap. For instance, if you’re swapping DAI for ETH, you must approve the ElectroSwap contract to access your DAI tokens.
    • This approval generates a blockchain transaction that requires you to pay a small amount of gas. The transaction specifies the contract address (ElectroSwap) and the number of tokens it can access.

  2. Executing the Swap

    • Once approved, ElectroSwap’s contract has the necessary permission to access your specified tokens. Now, when you execute the swap, ElectroSwap will be able to transfer the approved amount of tokens from your wallet and complete the transaction.
    • The approval remains valid until you revoke it, meaning you don’t have to approve the same token each time you swap (unless you choose a lower limit than your total intended swap volume).

  3. Ongoing Permissions

    • Many users opt to grant “unlimited” approvals for convenience, meaning the ElectroSwap contract can access any amount of a particular token without repeated approvals. While convenient, this comes with security considerations if the contract or account becomes compromised.

Best Practices for Security​

While approvals are necessary for interacting with ElectroSwap, you can take certain steps to keep your tokens safe.

  1. Limit Approvals When Possible

    • Instead of granting “unlimited” approval, consider setting a specific token amount for each transaction. This can help reduce exposure to potential risks.
    • If you regularly use ElectroSwap for small swaps, limiting approvals will ensure only a portion of your tokens is accessible to the contract at any given time.

  2. Review and Revoke Permissions Regularly

    • Platforms like Etherscan or wallets with permission management features (like MetaMask) allow you to review and revoke token approvals. This is useful for ensuring that only active contracts have access to your tokens.
tip

Regularly check and revoke permissions for contracts you no longer use. This is a proactive way to prevent potential misuse or unexpected access to your tokens.

  1. Stay Informed on Security Practices
    • Be aware of any security updates or announcements from ElectroSwap and other DEX platforms. Malicious actors may occasionally target DEX contracts, and being informed can help you take swift action if needed.
tip

Joining official communication channels or subscribing to announcements can help you stay on top of any potential security concerns.

  1. Use Trusted DEX Platforms Only
    • Avoid granting approvals to unknown or unverified contracts, especially on new or lesser-known exchanges. Stick to well-established DEXs like ElectroSwap, which undergo rigorous audits and are more resilient to security threats.

Frequently Asked Questions​

1. What happens if I approve unlimited tokens to ElectroSwap?

  • Approving unlimited tokens allows ElectroSwap to access any amount of that token in your wallet. While convenient, it could be risky if a vulnerability is found. You can always revoke unlimited permissions if you no longer want the contract to have ongoing access by using the approve function in the blockchain explorer of the token you'd like to revoke approvals for.

2. Can I still control my tokens after granting approval?

  • Yes, approval doesn’t transfer ownership of your tokens. It merely grants access to the specified contract to transfer tokens within the approved limit.

3. Do I have to approve tokens every time I use ElectroSwap?

  • If you set a specific limit, you might need to approve again if you exceed it. However, if you choose unlimited approval, you won’t need to approve for future transactions unless you revoke the permission.

Conclusion​

Token approvals are a fundamental part of interacting with ElectroSwap and similar DEXs. By requiring explicit permission to access tokens, these platforms provide users with transparency and control over their assets. While approvals are necessary for executing swaps, it’s essential to approach them thoughtfully. Using limited approvals, periodically revoking permissions, and staying informed are effective ways to balance security and convenience. By understanding how approvals work, you can enjoy a safer, more secure experience when trading tokens on ElectroSwap.