Allowance

1. What Is an Allowance

An allowance is the amount of a token that an owner has approved a specific smart contract or address to spend on their behalf. It is a core concept of the ERC-20 token standard and similar token standards on other chains.

2. How It Works

A token owner calls the approve() function to grant a spender a spending limit. The spender can then call transferFrom() to move up to that amount. Allowances persist until changed or reset to zero, and are often set to very large values ("infinite approval") to avoid repeated approvals. Revoking an allowance requires another approval transaction setting the amount to zero.

3. Why It Matters

Allowances enable the composability of DeFi — protocols can move your tokens only after you approve them — but they are also a major attack surface. If a malicious or compromised contract has an approval, it can drain the token balance. Infinite approvals amplify this risk, making allowance management a core security habit.

4. Key Facts

• Standard functions: approve(), transferFrom(), allowance()
• Many wallets show a warning for high-value approvals
• Allowance-revoking tools (like revoke.cash) are popular security utilities
• Approval scams trick users into approving attackers to drain funds

5. Related Concepts

• token-approval
• approval-scam
• token
• smart-contract-risk