The May 24, 2023 exploit of Local Traders on Binance Smart Chain — where an attacker drained approximately $115,595 by exploiting a missing access control check — is a textbook example of why token approval management is one of the most critical yet overlooked aspects of cryptocurrency security. For experienced users and developers, this incident provides an opportunity to implement a comprehensive approval auditing workflow that goes far beyond basic revocation.
The Objective
This tutorial walks through an advanced token approval auditing process designed to identify, evaluate, and remediate risky smart contract approvals across EVM-compatible chains. By the end, you will have a systematic approach to approval security that accounts for the specific type of vulnerability that enabled the Local Traders exploit — as well as more sophisticated attack vectors that could compromise approved funds even without direct contract exploitation.
Prerequisites
Before starting, ensure you have the following tools and knowledge:
Essential tools: A Web3 wallet (MetaMask, Rabby, or Frame recommended), access to Etherscan/BscScan/other block explorers, a token approval revocation tool (Revoke.cash, Unrekt, or Ceto), and a basic understanding of ERC-20 approval mechanics.
Knowledge requirements: Understanding of the ERC-20 approve() and transferFrom() functions, familiarity with EVM transaction structures, and the ability to read basic Solidity function signatures on block explorers.
Recommended setup: Use a dedicated “audit wallet” that is separate from your main holdings. This wallet should have minimal funds and be used exclusively for interacting with approval management tools and test contracts.
Step-by-Step Walkthrough
Step 1: Export your approval data. Visit Revoke.cash and connect your wallet. The platform will scan for all active token approvals across supported chains. Export this data — Revoke.cash provides a downloadable list of all contracts with active approvals, the tokens approved, and the approval amounts. Pay special attention to unlimited approvals (displayed as “Infinite” or very large numbers).
Step 2: Classify approvals by risk level. Create a three-tier risk classification system:
Tier 1 (Critical): Approvals to contracts with unverified source code, contracts associated with recently exploited protocols, or contracts you do not recognize at all. The Local Traders exploit demonstrates why unverified contracts should be treated as Tier 1 — the team’s unverified BSC contract meant no one could audit the access control flaw before it was exploited.
Tier 2 (Moderate): Approvals to established DeFi protocols that have not been recently audited, or approvals with unlimited spending limits on contracts you actively use. While these are generally safer, an unlimited approval means that any future vulnerability in the protocol could expose all your approved tokens.
Tier 3 (Low): Approvals to recently audited, well-established protocols (Uniswap, Aave, Compound) with limited spending allowances.
Step 3: Verify contract integrity. For each Tier 1 and Tier 2 approval, verify the contract on the appropriate block explorer. Check: Is the source code verified? When was the contract last deployed or modified? Does the contract owner match the expected protocol team? Are there any recent security advisories?
In the Local Traders case, the contract at the center of the exploit had unverified source code — an immediate red flag. If you had been following this auditing process, that contract would have been flagged as Tier 1 and its approvals revoked before the exploit occurred.
Step 4: Revoke strategically. Do not blindly revoke all approvals. Revoke Tier 1 approvals immediately. For Tier 2 approvals, consider whether you actively use the protocol. If not, revoke. If yes, consider reducing the approval amount to the minimum needed for your next transaction rather than maintaining an unlimited approval.
Step 5: Set up monitoring. Use on-chain monitoring tools to track new approvals on your wallet. Forta, OpenZeppelin Defender, or custom Etherscan alerts can notify you when your wallet grants a new approval — especially to unverified contracts. This provides real-time protection against phishing attacks that trick you into approving malicious contracts.
Step 6: Implement an approval schedule. Make approval auditing a regular practice. Weekly audits for active DeFi users, monthly for casual users. Each audit should repeat steps 1-4, with particular attention to any new approvals added since the last review.
Troubleshooting
Problem: Revoke transaction fails with “execution reverted.” This typically occurs when the contract’s approval function has custom logic that prevents revocation. In this case, use the contract’s explicit revoke function if available, or transfer your tokens to a new wallet address.
Problem: Cannot find an approval in Revoke.cash but your wallet shows a balance deduction. Some protocols use permit signatures (EIP-2612) instead of traditional approvals. These do not show up in standard approval scanners but can still authorize token transfers. Check for outstanding permit signatures using tools like Gasnow or by examining your wallet’s transaction history for permit() calls.
Problem: Approval scanner shows incorrect data. Different chains may have delayed indexing. Cross-reference with the block explorer directly for the most accurate approval data.
Mastering the Skill
Advanced approval management extends beyond simple revocation. Consider implementing the following practices for maximum security:
Use spender contracts instead of direct approvals where possible. Tools like Uniswap’s Permit2 contract allow you to grant approvals to a single, audited intermediary that enforces spending limits and expiration times. This reduces the number of contracts with direct access to your tokens.
For developers: implement approval patterns in your own contracts that minimize user risk. Use increaseAllowance() and decreaseAllowance() instead of setting absolute values. Consider implementing time-locked approvals that automatically expire after a set period.
With Bitcoin at $26,335 and the broader market under pressure from the U.S. debt ceiling standoff on May 24, the crypto ecosystem can ill afford additional security incidents. Taking proactive control of your token approvals is one of the most effective ways to ensure you are not the next victim of a preventable exploit.
Disclaimer: This article is for educational purposes only and does not constitute financial or security advice. Always conduct your own research and consider consulting with a security professional for high-value holdings.
token approvals are the silent killer. most people approve unlimited spending and forget about it. this exploit proves why that habit will cost you
ciphermole_ the Local Traders exploit was specifically a missing access control check, not an approval issue. but your point stands, unlimited approvals are a ticking bomb on every wallet
Revoke.cash should be bookmarked by every crypto user. takes 30 seconds to audit your approvals and can save you thousands
Sven D. yes revoke.cash but half the problem is users approving stuff in the first place. the UI on most dapps defaults to unlimited approval and buries the custom option
the part about unlimited vs exact approvals is key. MetaMask added that feature for a reason. use it
been using Rabby wallet specifically because it shows you exactly what youre approving before you sign. caught 2 suspicious approvals last month that way
^ Rabby is underrated for this. the simulation preview alone has saved me from bad approvals multiple times