Staying safe when connecting a crypto wallet
Wallet connection safety in plain words
The key to your address, the secret code your wallet uses to confirm operations, is stored in the wallet, and the wallet itself signs every operation with that key (what is a private key). A site can only send a request. The wallet opens it in a separate window with the details, and nothing happens until you press "Confirm".
Picture an online shop that sends you bills, which you pay yourself, every time. That is how a connected wallet works. An approval approve (token approval) is like a subscription with automatic payments at that shop. The shop takes the money itself, up to the amount you allowed, until you cancel the subscription. If the shop turns out to be a fraud, the subscription becomes its way of taking your money. A permit signature sets up the same kind of subscription in a different way.
Is it dangerous to just connect a wallet to a site?
No. The site receives only your address, and to move your tokens, that is, crypto issued on top of someone else's network, such as USDT, it needs a separate signed permission2. Network records are open to everyone, so from your address the site can see what crypto it holds2.
What to check before you sign
Before every signature, check five things:
- the site address in the browser bar matches the official one, and you opened it yourself, not from an ad or a message (the article phishing and scams explains how to spot lookalike sites);
- the type of request matches what you are doing; signing in to a site, for example, needs no approval;
- you understand who gets the right and why (if not, or if the wallet warns of danger, stop and leave the site);
- the token and the amount are the ones the deal needs;
- if you have a hardware wallet, a separate device for the key, its screen shows the same details.
A hardware wallet keeps the key apart from the computer, yet it does not make signing unreadable data safe. If the screen shows only unreadable characters instead of details, this is blind signing blind signing, and scammers exploit it3. The article hot vs cold crypto wallet describes how such a wallet works.
Check a familiar site too, because it can also be hacked. In December 2023, malicious code got into a program that sites use to connect wallets, and on those sites users received signature requests that drained their crypto4.
For new and unfamiliar sites, set up a separate wallet and keep on it a small amount for the specific task plus a little of the network coin, meaning the network's own crypto used to pay the fee. An approval signed from this wallet covers only its address, and savings at another address stay out of reach. The guide how to store crypto explains where to keep the savings themselves.
How to revoke an approval
An approval has no expiry date, and disconnecting your wallet from the site does not cancel it. The approval is removed with a separate operation called revoke5. Here are the steps5:
- Open an approval checker, for example the approvals section of the Etherscan block explorer or the Revoke.cash site. where to check: ethereum.org, "How to revoke smart contract access to your crypto funds", list of services
- Connect your wallet and select the same network in the checker as in the wallet.
- Find the smart contract whose approval you no longer need and choose to revoke it.
- Confirm the revoke in your wallet. This is a network operation, and it costs a network fee. where to check: the wallet shows the fee before you confirm
- After a few minutes, open the checker again and make sure the approval is gone from the list.
A revoke stops the smart contract from making new withdrawals. It does not close deposits, loans or your other positions on that site5. An unused permit signature is cancelled with a separate operation that costs a fee, and this is worth doing only if you are sure you signed a permit on a scam site6.
What to do if you signed an approval for a scam site
Revoke the approval that site received right away7. Move the remaining crypto from that address to another address of yours, especially if you signed a permit or are not sure you have found every approval. If you entered your seed phrase on the site, revoking will not help, and everything has to go to a new wallet with a new seed phrase. Report the theft to the police in your country8. A confirmed transfer on the blockchain cannot be reversed, so do not pay anyone who promises to return stolen funds for a fee. This kind of fraud is described in phishing and scams.
What signatures a site asks for after you connect
The most common signature requests are of four kinds: sign-in, transfer, approve and permit. A sign-in signature proves to the site that the address is yours9. A transfer immediately sends the stated amount from your address or starts an action of a smart contract, a program inside the network, and the article what is gas explains the network fee for it.
| Sign-in | Transfer | Approve | Permit | |
|---|---|---|---|---|
| Visible in an approval checker? | no | no | yes | no1 |
| Network fee when signing? | no | yes | yes | no2 |
| Lets someone take the token later? | no | no | yes | yes |
What a token approval is
Approve is that very subscription in which the site's smart contract takes this token from your address on its own, several times, until it uses up the stated amount10. A swap site asks for an approval before your first deal with a token that is new to you, because without permission its smart contract cannot take the token you are swapping7.
Why does the wallet warn about an unlimited approval?
The wallet warns you because an unlimited approval lets the smart contract take all of this token on your address, however much of it is there now or arrives later7. Compared with a subscription, this is a power of attorney over all the money in one currency on your account. Honest swap sites often ask for an almost unlimited amount so they do not have to ask for a new approval before each deal, and scam sites use the same trick7. Do not give sites unlimited access: if your wallet lets you change the amount in the approval window, enter the one the current deal needs5.
What a permit signature is
Permit is a signature that gives a smart contract the same right over your token as an approval, only without a separate operation on the network. You sign a message, and someone else can record it on the network, so you do not need the network coin for a fee11. When the wallet displays the word Permit, you are being asked for permission over a token, even when the site calls it a sign-in or a check.
Until a permit signature is used, it is not on the blockchain, and approval checkers cannot see it6.
More detail on token standards, permit fields, Permit2 and signatures for ETH
Approve works this way for ERC-20 tokens on Ethereum and compatible networks and for TRC-20 tokens on the Tron network12. The article token standards explains how such standards differ. Experienced users compare the address of the smart contract that will receive the right with the address in the site's documentation.
The text of a permit signature contains the address you are giving the right to (spender), the amount (value) and the expiry time (deadline)11. Permit2 is a shared approvals smart contract from the team behind the Uniswap exchange. You give it an approval for a token once, and after that, sites that work with Permit2 get the right to that token through a signature, with a stated amount and time limit13.
An approval cannot take a network coin such as ETH, because it works with ERC-20 tokens, and ETH appeared before that standard and does not conform to it14. The network coin leaves your address through a transfer you signed yourself, or through a signature that hands control of the address to a smart contract. That kind of signature was introduced by the Pectra upgrade of Ethereum15. If an unfamiliar site offers to "upgrade your account" or "make a smart account", refuse. An approval can be given for WETH, the token version of ETH14.
