Why I Changed How I Manage Token Approvals — and You Should Too

I’ve been living with token approvals longer than I’d like to admit. They saved my morning once, and almost cost me my savings another time. Whoa! Initially I thought the approvals UX was just clunky UI, but then I realized there were deeper protocol-level dangers tied to unlimited allowances that could let an attacker drain tokens from a compromised contract if I wasn’t paying attention. That realization changed how I sign transactions and manage allowances.

Really? Yep. My instinct said “give approval once and forget it”, because that felt fast and convenient. Actually, wait—let me rephrase that: convenience often disguised risk, especially when I used infinite approvals for DEXs and yield aggregators. On one hand infinite approvals reduce friction for repeated trades; on the other hand a rogue upgrade or a malicious contract can sweep balances without asking. Hmm… that trade-off stuck with me.

Here’s what bugs me about common advice. Most guides say “use revocation tools” but don’t explain the how or why in plain terms. So I’ll be honest — I spent a weekend tracing calldata to understand what a spender actually does with my tokens. Something felt off about blindly approving contracts that asked for “max uint256”. The more I dug, the more I saw patterns that looked risky and avoidable.

Short version: don’t approve infinite allowances unless you trust the contract completely. Seriously? Yes. There’s also the nuance of ERC‑20 behavior across tokens — not every token implements the safeApprove pattern or follows expectations when you set allowance from nonzero to nonzero. On top of that, race conditions can make a simple approve operation dangerous if the spender calls transferFrom in between allowance changes, so the old best practice of setting allowance to zero before setting the desired amount is still relevant for many tokens.

Okay, so check this out—transaction simulation became my go-to defense. It shows what will happen before a signature lands on-chain. My first simulation flagged a weird approval flow where a contract immediately transferred tokens to a third-party during the same call. That surprised me. Initially I thought simulations were optional niceties, but then I realized they catch reverts, unexpected state changes, and even potential sandwich or flash-loan patterns if you examine mempool-like behavior closely.

There are practical tactics that tame approval risk. Use per-amount approvals when possible instead of infinite allowances. Use EIP‑2612 permits when dapps support them to avoid on-chain approvals entirely. Also, revoke approvals after large or one-off interactions. On the tech side, monitor allowance storage slots and verify spender addresses against project docs to reduce spoofing risk. I’m biased, but tooling that surfaces allowances and simulates transactions changed my behavior overnight.

One time I almost approved an NFT marketplace aggregator that requested access to all my ERC‑20 balances. Whoa! I paused and simulated the flow. The simulation revealed a batch transfer to an intermediary contract, which I didn’t want. That pause saved me and it felt oddly empowering. Later I used a revocation UI to clear the allowance and then reissued a limited approve call for the exact amount I needed for the purchase.

Practical checklist. First, always verify the spender address and contract source. Second, prefer exact-amount approvals or time-limited approvals when supported. Third, simulate the transaction before signing. Fourth, revoke afterwards when feasible. Fifth, use a wallet that surfaces unsafe patterns and shows calldata in human-friendly form — that last point made a real difference for me.

How the right wallet helps — my take

I started using rabby wallet because it brings approvals and simulation front and center. It doesn’t hide the calldata in some scary hex blob. Instead it prompts me about approvals, shows who will be able to move tokens, and lets me run a dry-run of the transaction in a readable way. On a practical level that meant fewer “oh crap” moments and faster detection of odd flows.

Some implementation details worth knowing. Approve uses approve(spender, amount) and transferFrom depends on that allowance — so if you set amount to max uint256, you essentially grant unlimited spending power until you revoke. Permit (EIP‑2612) moves signature-based approval off-chain, so you avoid the approve_tx gas cost but you still must trust the spender’s intended behavior. There are edge cases where tokens have buggy approve semantics; simulation can catch those before you lose funds. I’m not 100% sure every token will behave the same way, but simulation reduces surprises.

On gas: setting small allowances costs less than repeated approvals if you do many operations, though permit can be cheaper overall. Also, simulation often shows accurate gas estimates and potential revert reasons, which helps avoid wasted gas. That said, simulation won’t always predict MEV or mempool-level sandwiching perfectly, though it narrows the unknowns substantially. It’s not magic, but it is useful.

Some real-world shorthand I use now. Approve small. Simulate always. Revoke quickly. Track approvals monthly. Keep a hardware-backed signer for big approvals. And when in doubt, ask — the community often spots red flags fast. These steps aren’t foolproof, but they tilt the odds in your favor.