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Why do I need to approve my tokens before a trade?
Why do I need to approve my tokens before a trade?

Everything you need to know about approvals and why they are critical for secure smart contract interactions

Matt avatar
Written by Matt
Updated over a week ago

Token Approvals

The approval aka "Give permission to swap XXX" is step 1 of 2 when completing a swap.

The steps are:

  1. Approve tokens to be spent (requires a small gas fee)

  2. Swap the tokens (requires a relatively higher gas fee)

Approvals are considered an industry standard across all decentralized exchanges (like Uniswap, PancakeSwap, CowSwap etc.), and protect your wallet from being accessed by a smart contract without your permission. By design, smart contracts can’t access your tokens unless you approve access from your end. By ‘unlocking’ your tokens, you are give permission to the 1inch smart contract to spend your assets. The miners of the network are compensated with a gas fee (paid by you) to record this action on the blockchain.

Once you have successfully approved your tokens to be used with a contract you won't need to approve them again.

Please note that an approval is needed for each different contract, including:

  • Aggregation Protocol

  • Limit Order Protocol

  • Liquidity Protocol (Both Providing Liquidity and Farming)

  • Governance Staking

Before approving tokens, the swap window will look like this:

Once permission has been granted you will see the "Swap Token" enabled. You can now proceed with the swap.

Permit 712 - "Free" signed token approvals

If the token you are selling falls under the Permit 712 signed token approvals, then no gas fee is needed. You can simply approve and swap the token in one step, for free! You can find a list of all Permit-712 compatible tokens here.

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