In the context of Ethereum and token management, approvals refer to the process of granting permission for a third party, such as a smart contract or another user, to spend or transfer a specified amount of tokens on behalf of you as the token holder.
Approvals in action
When interacting with a dApp that requires access to your tokens, you will be prompted to approve a specific amount of tokens for the dApp to use. Once you approve the token allowance, the dApp can initiate token transfers or perform other actions on your behalf, up to the approved limit. This mechanism ensures that the dApp cannot access more tokens than you have explicitly allowed.
Managing approvals
You can view and manage your token approvals using wallets such as Family, or tools specifically designed for tracking token allowances. It is essential for you to monitor your approvals and ensure that you only grant allowances to trusted dApps or users to prevent unauthorized access to your funds.