What Is the Purpose of the "Approve" Function in the ERC-20 Standard? ▴ Learn

What Is the Purpose of the “Approve” Function in the ERC-20 Standard?

The "approve" function allows a token holder to grant a third-party address (usually a smart contract, like a DEX or lending protocol) permission to spend a specific amount of their tokens on their behalf. This is a critical step for interacting with DeFi protocols, as it allows the protocol's smart contract to move the user's tokens to execute a trade or collateralize a loan without needing the user's private key.

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