One of the reasons why DeFi is a fast-growing space in crypto is the convenience of having smart contract algorithms perform financial services, with little effort required from the investor. Blockchain smart contracts work behind-the-scenes to automatically execute most of our transactions, validations, asset swaps, staking operations and yield farming, allowing us to just sit back and let our money work for us.
For smart contracts to do that, we first have to give permission.
From a security standpoint, granting token approval to dapps and DEXs is an important and necessary step. It's essentially giving permission to the smart contract to access your wallet so it can perform all of the above-mentioned financial transactions on your behalf.
Pay attention to token approvals
Should you click 'Confirm' on every pop-up? Absolutely not.
As a DeFi and DEX user, you have to be extra vigilant. Hackers are using sophisticated phishing attacks targeting exactly this lack of attention from users.
If you mistakenly grant access to a hacker, you're essentially handing over your wallet and giving permission to take funds out of it. Make sure you dedicate full attention to any token approval message that appears on your screen.
Granting Phuture your token approval
Now that you understand the importance of paying attention to your token approvals, Phuture needs you to give token approvals when investing in our index funds. This is so Phuture's smart contract can swap your initial token (ETH or USDC) for the token representing the index fund you're buying (such as CAI).
To do that, there's a simple 2-step process.
- Approve your tokens to be swapped on the Phuture platform.
This will grant Phuture access to your wallet for a given transaction. The initial approval requires only a signature from your wallet, at no cost to you.
- Send your transaction, along with your approval signature.
Now you've given access to Phuture, confirm you wish to complete the transaction by sending your approval signature. This step will complete your investment.
Done! Now you've allowed Phuture to complete your purchase of our index funds.