Transaction Approval Attacks: The #1 Way People Lose Crypto in 2026

Most crypto theft doesn't involve sophisticated hacking. It involves tricking you into clicking "Approve."

If you've been in crypto for any length of time, you've probably heard horror stories: wallets drained overnight, entire portfolios vanishing without a single private key being compromised. The victims didn't get phished for their seed phrase. They didn't download malware. They simply signed a transaction they didn't understand.

Welcome to the world of crypto approval scams—the silent epidemic responsible for billions of dollars in losses, and the single most common vector for crypto theft in 2026.

In this comprehensive guide, we'll break down exactly how these attacks work, show you real examples of devastating exploits, and give you actionable steps to protect yourself. More importantly, we'll explain why traditional security measures aren't enough—and what actually works.

What Is a Transaction Approval?

Before we dive into the attacks, let's understand what we're actually talking about.

When you interact with a decentralized application (dApp)—whether it's a DEX like Uniswap, a lending protocol like Aave, or an NFT marketplace like OpenSea—you're not just sending tokens directly. You're granting that protocol permission to move tokens on your behalf.

This happens through a mechanism called the ERC-20 approve function.

How Token Approvals Work

Here's a simplified version of what happens when you swap tokens on a DEX:

You call approve() – You grant the DEX's smart contract permission to spend a specific amount of your tokens
The DEX calls transferFrom() – The contract moves tokens from your wallet to complete the swap
The approval persists – Unless you revoke it, that permission remains active indefinitely

The critical insight: approvals are not one-time permissions. When you approve a contract to spend your USDC, that approval typically stays active forever—or until you explicitly revoke it.

The MAX_UINT Problem

Here's where things get dangerous. When dApps request approvals, they often ask for unlimited approval—technically represented as MAX_UINT256, the largest possible number in Ethereum:

115,792,089,237,316,195,423,570,985,008,687,907,853,269,984,665,640,564,039,457,584,007,913,129,639,935

Why do they do this? Convenience. With unlimited approval, you only need to approve once, saving gas fees on future transactions. But this convenience creates a massive attack surface.

If you've ever approved unlimited spending on a contract that later gets exploited—or was malicious from the start—attackers can drain your entire balance of that token.

The 5 Types of Crypto Approval Scams

Understanding the attack vectors is your first line of defense. Here are the most common types of crypto approval scams targeting users in 2026.

1. Unlimited Approval Exploits

The attack: You approve a seemingly legitimate protocol. Months later, either the protocol gets hacked, the team turns malicious (rug pull), or a vulnerability is discovered. Attackers use your existing approval to drain your tokens.

Why it works: Most users forget about old approvals. They've moved on to new protocols, but their unlimited approvals remain active on contracts they haven't touched in years.

Real-world example: The Badger DAO exploit (December 2021) resulted in $120 million in losses. Attackers compromised Badger's frontend and injected malicious approval requests. Users thought they were interacting with Badger normally, but they were actually granting unlimited approvals to the attacker's address.

2. Malicious dApp Approvals

The attack: A new dApp launches with an attractive premise—maybe a yield farm promising high APY, an airdrop claim site, or a "revolutionary" new protocol. When you connect and interact, it requests approval for tokens you don't need to use on the platform.

Why it works: Users are conditioned to approve whatever the dApp asks for. If you're excited about a new opportunity, you're not carefully examining whether the approval request makes sense.

Red flags:

dApp requests approval for tokens not used in the transaction
Approval request appears before you've initiated any action
The approved address doesn't match the protocol's known contracts

3. Phishing Sites Mimicking Legitimate dApps

The attack: Attackers create pixel-perfect copies of popular dApps—Uniswap, OpenSea, MetaMask's portfolio site, popular airdrop claim pages. The URL is slightly different (uniswap-app.com instead of app.uniswap.org), but everything else looks identical.

Why it works: We're visual creatures. If something looks right, we assume it is right. Combined with urgency ("Claim your airdrop before it expires!"), users often don't verify URLs.

Common tactics:

Google ads for fake dApp sites (searching "Uniswap" might show a scam ad first)
Fake Discord/Telegram announcements about airdrops
Compromised social media accounts promoting "official" links
Typosquatting (microsft.com, uniswapp.org)

4. Permit Signature Phishing (Gasless Approvals)

The attack: This is the most insidious form of crypto approval scams because it doesn't even require a blockchain transaction. EIP-2612 introduced "permit" signatures—gasless approvals that work through off-chain signatures.

When you sign a permit message:

No gas is required (the attacker pays gas to use your signature)
It doesn't appear as a transaction in your wallet history
The approval activates only when the attacker submits your signature on-chain

Why it works: Users think "It's just a signature, not a transaction—what's the harm?" But permit signatures can grant the same unlimited spending permissions as regular approvals.

The trap: Attackers often disguise permit requests as:

"Sign to verify you own this wallet"
"Sign to log in to this dApp"
"Sign to claim your rewards"

5. NFT Approval Scams (setApprovalForAll)

The attack: setApprovalForAll is the NFT equivalent of unlimited token approval. When you grant this permission, the approved address can transfer any and all NFTs from that collection in your wallet.

Why it works: NFT marketplaces legitimately need this permission to list and sell your NFTs. But attackers exploit this by:

Creating fake minting sites that request setApprovalForAll
Phishing sites claiming to offer NFT staking or upgrades
Fake "collection migration" announcements

The damage: Unlike fungible tokens where you might lose some USDC, setApprovalForAll exploits can wipe out rare NFTs worth hundreds of thousands of dollars in seconds.

Case Studies: When Approvals Go Wrong

The Badger DAO Hack ($120M)

In December 2021, Badger DAO suffered one of the largest DeFi hacks in history. The attack wasn't a smart contract exploit—it was a frontend attack combined with approval abuse.

What happened:

Attackers gained access to Badger's Cloudflare API key
They injected malicious scripts into the frontend
Users visiting Badger were prompted for seemingly routine approvals
These approvals granted unlimited spending to the attacker's address
The attacker waited, then drained $120 million from approved wallets

The lesson: Even legitimate protocols can be compromised. Your security depends on more than the protocol's smart contracts.

The Permit Phishing Campaign (2023-Present)

Starting in 2023 and continuing today, organized groups have run sophisticated permit signature phishing campaigns. Using:

Fake airdrop claim sites
Compromised Discord servers
Twitter account takeovers

They've stolen an estimated $300+ million through gasless permit approvals alone.

The pattern:

Announcement of "surprise airdrop" or "exclusive mint"
Link to professional-looking claim site
User connects wallet and sees "Sign to claim"
User signs what appears to be a login message
User's tokens are drained within minutes

The OpenSea Phishing Incident

In February 2022, attackers used a phishing campaign to steal NFTs worth over $1.7 million from OpenSea users. The attack exploited:

Old, pending setApprovalForAll transactions from the Wyvern protocol
A migration period where users had to sign new listings
Phishing emails appearing to come from OpenSea

Victims lost Bored Apes, Azukis, and other valuable NFTs because they'd previously granted broad approvals.

How to Check Your Current Approvals

Right now, you likely have dozens—maybe hundreds—of active approvals you've forgotten about. Here's how to audit them.

Revoke.cash

The most popular approval management tool. Visit revoke.cash, connect your wallet, and see every active approval across multiple chains.

What you'll see:

Every token approval you've ever granted
The spender address (which contract can use your tokens)
The approved amount (limited or unlimited)
Options to revoke each approval

Pro tip: Sort by "Approved Amount" descending to find your riskiest unlimited approvals first.

Etherscan Token Approvals

For Ethereum mainnet, Etherscan provides a native approval checker:

Go to etherscan.io
Search for your wallet address
Click "More" → "Token Approvals"

This shows all ERC-20 approvals with direct links to revoke them.

Network-Specific Tools

BscScan for BNB Chain
Polygonscan for Polygon
Arbiscan for Arbitrum

Most block explorers now include approval checkers.

What to Look For

When auditing your approvals, flag anything that:

Grants unlimited approval to contracts you no longer use
Was approved to addresses you don't recognize
Involves high-value tokens you're holding long-term
Was granted to contracts that have been exploited (check news)

The Blind Signing Problem

Here's the uncomfortable truth: even if you're careful, you often can't know what you're approving.

When your wallet shows you a transaction to sign, you typically see:

A blob of hexadecimal data
Maybe a function name like "approve" or "setApprovalForAll"
An address (that means nothing to most users)
A gas estimate

You don't see:

What the transaction actually does in plain English
Whether the approved amount is reasonable
Whether the contract is legitimate
What risks you're taking on

This is called blind signing, and it's the root cause of most crypto approval scams.

Why Wallets Show Cryptic Data

Smart contract interactions are complex. A simple swap might involve multiple contract calls, token transfers, and state changes. Translating all of this into human-readable format is technically challenging and can vary wildly between protocols.

Most wallets default to showing raw transaction data because it's "accurate"—but accuracy without comprehension is useless for security.

The Signature Request Trap

It gets worse with signatures. When a site asks you to sign a message, your wallet shows you... a message. Maybe it's readable ("Sign in to OpenSea"). Maybe it's not (a long string of numbers and characters).

But that "message" might be a permit signature granting unlimited token approval. It might be a signature authorizing NFT transfers. Without decoding, you simply don't know.

Prevention Strategies: A Practical Checklist

Protecting yourself from crypto approval scams requires both habits and tools. Here's your action plan.

1. Review Before Signing—Every Time

Never approve on autopilot. Before clicking "Confirm," ask:

What token am I approving?
What amount am I approving?
What address/contract is receiving this approval?
Does this make sense for what I'm trying to do?

If a DEX swap for 100 USDC is requesting unlimited WETH approval to an unknown address, that's a red flag.

2. Use Limited Approvals Instead of Unlimited

When possible, approve only what you need. If you're swapping 100 USDC, approve 100 USDC—not unlimited. Yes, you'll pay gas again next time. That's a feature, not a bug.

How to do it: Most wallets now let you edit the approval amount. In MetaMask:

When the approval popup appears, click "Edit Permission"
Select "Custom Spend Limit"
Enter the amount you actually need

3. Regularly Revoke Unused Approvals

Make approval auditing a monthly habit:

Visit revoke.cash or similar tool
Review all active approvals
Revoke anything you don't actively use
Prioritize unlimited approvals to older/unused protocols

Cost consideration: Revoking approvals requires gas. On L2s like Arbitrum or Polygon, this is negligible. On Ethereum mainnet during high gas periods, batch your revocations or wait for lower gas.

4. Use Separate Wallets for Different Risk Levels

The most effective strategy: don't put all your eggs in one basket.

Vault wallet: Cold storage or hardware wallet. Long-term holdings only. Never connects to dApps.
Active DeFi wallet: Hot wallet for regular dApp interactions. Holds only what you're actively using.
Burner wallet: For risky activities—new protocols, NFT mints, airdrop claims. Funded with minimal amounts.

If your burner wallet gets compromised, you lose days of activity, not years of savings.

5. Verify URLs and Bookmark Trusted Sites

Bookmark every dApp you use regularly
Never click links from Discord, Telegram, or Twitter DMs
Double-check URLs before connecting your wallet
Use a browser extension like Kairo Guard to warn about known phishing sites

6. Be Skeptical of Urgency

"Claim your airdrop in the next 24 hours!" "Flash sale—mint now before it sells out!" "Emergency migration—act immediately!"

Urgency is the attacker's best friend. Legitimate protocols don't pressure you into instant action. If something creates panic, that's exactly when you should slow down.

Transaction Simulation: Helpful but Not Enough

Modern wallets increasingly offer transaction simulation—showing you what will happen before you confirm. This is genuinely useful, but it has significant limitations.

What Simulation Shows

A good simulator will display:

Tokens leaving your wallet
Tokens entering your wallet
NFTs being transferred
Approval changes

This catches many obvious attacks. If a "claim airdrop" transaction shows tokens leaving your wallet instead of entering, that's clearly wrong.

What Simulation Misses

Delayed attacks: Simulation shows immediate effects. It can't predict that an approval granted today will be exploited six months from now when the protocol gets hacked.

Permit signatures: Off-chain signatures often can't be simulated because they don't create immediate on-chain effects.

Conditional logic: Some attacks use complex conditions that only trigger under specific circumstances the simulator doesn't know about.

Social context: Simulation can tell you "this grants unlimited approval to contract 0x1234." It can't tell you whether that contract is legitimate or a scammer.

Bottom line: Simulation is a useful sanity check, not a security guarantee. Think of it as one layer in a defense-in-depth strategy.

How Kairo's Policy-Gated Transactions Prevent Approval Attacks

This is where Kairo Guard fundamentally changes the game. Instead of hoping users will catch problems themselves, Kairo enforces security policies at the transaction layer.

Human-Readable Transaction Summaries

Kairo doesn't show you hexadecimal gibberish. Every transaction is decoded and displayed in plain English:

"This transaction will approve USDC for unlimited spending by contract UniswapV3Router (0x1234...)"

Or better:

"⚠️ Warning: This transaction will grant unlimited approval to an unverified contract. The last similar approval to this address resulted in drained wallets."

You know exactly what you're signing, every time.

Policy Enforcement: Block Suspicious Approvals Automatically

With Kairo, you can define policies that prevent dangerous transactions before they happen:

Block unlimited approvals by default – Only allow limited approvals unless you explicitly override
Whitelist known contracts – Only interact with protocols you've verified
Block approvals to EOAs – Approvals should go to contracts, not externally-owned addresses
Require verification – New contracts must pass security checks before interaction

These policies work automatically. You don't need to remember to check—Kairo enforces your rules at the signing layer.

Spending Limits and Allow/Deny Lists

Set your own boundaries:

Maximum approval amounts – Never approve more than $10,000 of any token, period
Allowlisted contracts – Pre-approve trusted protocols for faster interaction
Denylisted addresses – Known scam addresses are blocked automatically
Time-based restrictions – Require additional confirmation for high-value transactions

Context-Aware Warnings

Kairo doesn't just decode transactions—it understands context:

"This site's URL doesn't match Uniswap's official domain"
"This contract was deployed 2 hours ago and has no verified source code"
"Similar permit signatures have been used in recent phishing campaigns"
"This NFT approval would grant access to your entire collection worth approximately $X"

You get the information you need to make informed decisions.

Frequently Asked Questions

What's the difference between a token approval and a token transfer?

A transfer moves tokens from your wallet immediately. An approval grants permission for a third party to transfer tokens later. Approvals are often more dangerous because the actual theft can happen at any time after approval.

Can I revoke an approval after I've granted it?

Yes! Approvals can be revoked at any time through a new transaction that sets the approved amount to zero. Tools like revoke.cash make this easy. However, you can't recover tokens that were already stolen using the approval.

How much does it cost to revoke an approval?

Revoking requires an on-chain transaction, so you'll pay gas fees. On Ethereum mainnet, this might cost $2-20 depending on network congestion. On L2s like Arbitrum or Polygon, it's usually just a few cents.

Are hardware wallets protected from approval attacks?

Hardware wallets protect your private keys, but they don't protect you from signing malicious transactions. If you approve a malicious contract using your hardware wallet, the attacker can still drain your tokens. Hardware wallets prevent seed phrase theft; they don't prevent approval attacks.

What's a permit signature and why is it dangerous?

Permit signatures (EIP-2612) allow gasless approvals through off-chain signatures. They're dangerous because they don't appear as transactions—you're just "signing a message"—but they grant the same spending permissions as regular approvals. Attackers love them because victims often don't realize they've approved anything.

How do I know if a contract is legitimate?

Check for: verified source code on block explorers, age of the contract (new contracts are higher risk), official announcements from the protocol team, community discussion on forums/Discord, and whether the contract address matches official documentation.

Should I revoke all my old approvals?

Start with the highest-risk ones: unlimited approvals to contracts you no longer use, especially on protocols that have had security incidents. You don't need to obsessively revoke everything, but periodic cleanup reduces your attack surface.

Why do dApps request unlimited approval?

Convenience and gas savings. With unlimited approval, you only approve once per token. With limited approvals, you re-approve each transaction. This UX choice prioritizes convenience over security—which is why tools like Kairo Guard let you override these defaults.

The Bottom Line

Crypto approval scams are the leading cause of crypto theft not because they're technically sophisticated, but because they exploit the gap between what users see and what they're actually signing.

The solution isn't just being more careful—it's using tools that make security the default:

Audit your current approvals using revoke.cash
Limit future approvals instead of granting unlimited access
Use separate wallets for different risk levels
Install Kairo Guard to get human-readable transactions and policy enforcement

The attackers are organized, sophisticated, and patient. Your defense needs to be just as systematic.

Don't wait until after you've lost funds to take security seriously. Every unlimited approval is an open door. Every blind signature is a gamble. Close the doors. Stop gambling.

Get Kairo Guard →

Have questions about approval security or want to report a new scam pattern? Join our Discord community or reach out on Twitter.