Why Do I Need To Approve a Token Before Trading?

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Why Do I Need To Approve a Token Before Trading?

This step enhances security when swapping assets. You must first authorize each token that you intend to exchange when utilizing a DEX Aggregator. DEXs and DEX Aggregators execute and settle transactions using smart contracts. To utilize a smart contract, users must first allow it to validate your token balance and then authorize it to transfer the quantity of tokens you want to exchange from your wallets.

Typically, a limit is specified by default that determines the total quantity of tokens that may be moved when using your digital wallet. MetaMask gives you the option to approve just the amount you want to swap or a max amount you have in your wallet so that you don’t have to go through the approval process again.