The first time you do a swap on any Decentralized Exchange, you will need to approve the token before swapping. Here is the step when you want to swap your token:
- Approve tokens to be spent (requires a small gas fee)
- Swap the tokens (requires a relatively higher gas fee)
To be clear, the approval of allowances serves the purpose of allowing the smart contract (with which you want to interact) to transfer the tokens you hold in your wallet. By ‘unlocking’ your tokens, you are permitting that Decentralized Exchange 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.
Approvals are considered a system standard across all decentralized exchanges (like Uniswap, PancakeSwap, SushiSwap, 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 wallet.
If there are any questions, please feel free to join our community for further discussions about Crypto/Neko Wallet with our team and other members!