- Approvals are required because Matcha is a decentralized exchange (DEX) that uses the Ethereum blockchain to settle trades.
- Approvals on v4 are required once per token, per wallet, and require a small amount of ETH to pay for the transaction.
- Learn more about the benefits of 0x Protocol v4 here
Why are token approvals necessary?
When using a DEX, like Matcha, you must first approve each token that you plan to trade. DEXs use smart contracts on the Ethereum blockchain to execute transactions. To use a smart contract, you must 1) permit it to validate your token balance, and 2) allow it to transfer the number of tokens that you wish to trade from your wallet.
As a real-life example, think of the token approval process similar to an artist (user) selling their artwork (token) in a gallery (Matcha). Before an artist can display their artwork at the gallery, the artist first needs to prove that they own it. Then both parties will sign a contract that gives the gallery permission to display and sell the artwork on behalf of the artist.
Matcha puts user safety first
Matcha uses the 0x Protocol v4 smart contacts, which have been thoroughly tested by 0x Labs and top blockchain security company, ConsenSys Diligence.
📚 Recommended reading to learn more about the ERC-2O standard and token approvals: