DeFi Approval Scams: How Bad Token Permissions Drain Your Wallet and How to Revoke Them

Introduction — Why token approvals matter

When you interact with a DeFi app, NFT marketplace or other dApp you often sign a transaction that gives a smart contract permission to move specific tokens from your wallet. Those permissions (commonly called "approvals" or "allowances") are what let decentralized apps execute trades, staking and transfers without asking you for every action.

That convenience comes with a downside: a malicious or compromised contract that has an allowance can move your tokens at any time — sometimes without any further confirmation from you. In practice, attackers and sweep-bots routinely scan for wallets with lingering or unlimited approvals and drain assets seconds after finding a target.

Understanding and managing approvals is now one of the most effective ways to reduce your exposure to DeFi scams and rug pulls.

How approval scams work — common tactics and technical background

There are two technical patterns to know:

• ERC‑20/721/1155 approvals: ERC standards let you approve a contract or address to spend a specific token amount (or, in the case of approvals like setApprovalForAll, grant control over many tokens). Once approved, the spender can transfer tokens up to the allowed amount — or unlimited if you approved the maximum.
• Passive exploitation: A malicious contract rarely needs to "ask" again. If you previously gave it allowance (or a compromised legit contract still has an allowance), an attacker can pull assets at will.

Attackers exploit this in several ways: fake mint or airdrop pages that ask you to "approve" a contract, phishing DEX/frontends that request unlimited allowances, and even compromised legitimate projects whose contracts are later abused. Because unlimited approvals are common for UX reasons, their prevalence is high and represents a measurable risk in the ecosystem.

There have also been scam variations that trick users into revoking suspicious approvals: scammers airdrop fake tokens or approvals into wallets and then prompt victims to "revoke" them using a third-party tool — the revoke transaction can be manipulated to cost high fees or route gas in ways that benefit the attacker. Revoke.cash and other tools reported and patched these tactics after incidents in 2023.

How to check and safely revoke dangerous approvals (step-by-step)

Below are safe, practical steps to audit and remove dangerous approvals. They assume you are using an EVM-compatible wallet (MetaMask, WalletConnect-compatible wallets, etc.). Always double-check contract addresses and use well-known block explorers or established tools.

1) Inspect your approvals

1. Use a trusted approval checker: Etherscan's Token Approval Checker or similar explorers (BscScan, PolygonScan) will list allowances for an address. For a more user-friendly multi‑chain view, use Revoke.cash or Unrekt. These tools show which contracts can spend tokens from your wallet.
2. Look for unlimited or very large allowances and any recent approvals you don't recognize. Sort by date when possible so suspicious recent approvals appear first.

2) Revoke or reduce the approval

1. From the approval tool (e.g., Revoke.cash) either revoke (set allowance to zero) or update the allowance to a small, specific amount. Revoking requires an on‑chain transaction and will incur gas fees.
2. If you prefer not to use a third‑party site, block explorers like Etherscan provide a token approvals page where you can connect and submit the revoke transaction directly.

3) Safety checklist before you sign a revoke

• Verify the tool's domain (avoid impostor sites). Use bookmarks to reach Revoke.cash or Etherscan.
• Check gas estimates and beware unusually high fees — scams have used "gas token" tricks to inflate cost during revokes in the past. If a revoke request looks unusual, pause and investigate.
• Prefer revoking during normal network conditions; if gas is very high, wait for lower fees unless you believe an active drain is imminent.

4) When revoking may not help

If attackers already have your seed phrase or the wallet is being swept by a bot as soon as ETH arrives, revoking approvals won’t stop theft — the wallet is compromised. In that case, move uncompromised funds to a new wallet (create a new seed) and stop using the compromised address. Revoke.cash’s FAQ and official help pages emphasize that revocation is preventative and cannot recover already-stolen funds.

Prevention & best practices

• Use separate wallets: keep a cold (long-term) wallet for holdings and a hot wallet for everyday DeFi interactions.
• Minimize approvals: avoid “approve max” unless absolutely necessary; prefer limited allowances set to the exact amount needed.
• Use hardware wallets for private key safety — but remember: a hardware wallet protects the key, not the approval model; approvals still grant smart-contract access.
• Regular audits: make approval checks a monthly habit, or after interacting with any new dApp. Research suggests many users leave unlimited approvals active for long periods, increasing risk.
• Trust but verify: confirm contract addresses via the project’s official channels and block explorers, and avoid clicking links in unsolicited messages or Discord/Telegram posts.

Conclusion — Approvals are a core DeFi permission model and also an avoidable attack surface. Regularly checking and revoking unnecessary approvals is a low-effort, high-impact step to protect your crypto. If you suspect theft, revoke active approvals to limit future damage, move remaining funds to a new wallet, and report the incident to platform support and law enforcement where appropriate.

For detailed walkthroughs, follow the official MetaMask guidance and the Revoke.cash help pages to learn the precise UI steps for your wallet and network.