Crypto Terms: Letter I

What is Infinite Approval?

Infinite Approval MEANING:
Infinite Approval - is defined as the action of programming smart contracts to allow spending an unlimited amount of coins or tokens.
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Let's find out Infinite Approval meaning, definition in crypto, what is Infinite Approval, and all other detailed facts.

Infinite approval is a programming practice that enables smart contracts to spend an unlimited amount of funds on a user’s account. In most cases, smart contracts are authorized to use a specific amount of funds. However, when an infinite approval is established, a smart contract asks to be granted access to an unlimited number of coins or tokens stored in the user’s account.

In the cryptocurrency world, this practice is quite controversial.

To understand infinite approval better, let’s have a look at a real-life example with Bancor.

In order to be able to use the services, one of Bancor’s users had authorized smart contracts so they could withdraw any amount of tokens from his account. However, unknowing to him, the smart contracts he had just authorized, were a major security risk. This type of vulnerability could have been exploited by hackers to get away with all of his tokens.

Luckily, this didn’t happen since Bancor became aware of this issue and made relevant changes. In this situation, the developer team ensured that the smart contracts will never ask for an unlimited amount of tokens during authorizations again. In order to make sure the user doesn’t lose his funds, Bancor’s programmers had to “steal” the user’s tokens and return them at a later time.

This incident brought out the fact that many decentralized applications (dApps) used infinite or overly large approvals. It included Compound, Uniswap, bZX, Aave, Kyber, dYdX, and many other platforms whose programmers practiced infinite approvals.