Token approvals cost gas. Unlimited allowance risks more.
Swapping or depositing ERC-20 tokens may require a spender contract to be approved first. Later changing or revoking permissions can require additional transactions. A higher APY may not recover those costs, especially on a small position.
A transparent $1,000 hypothetical
Suppose a $1,000 vault earns 5% annualized and a proposed vault earns 10%. The move already costs $10 in ordinary gas and fees. If changing token allowance and later revoking unused spending permission costs another estimated $5, the modeled all-in friction is $15.
| Scenario | Estimated switch costs | Break-even at +5pp/year |
|---|---|---|
| Ordinary gas/fees only | $10 | 73 days |
| Plus estimated approval/revoke gas | $15 | 110 days |
These values are fictional simple-interest inputs. Revocation may happen later rather than at move time, and actual approval/revoke gas depends on chain, token and wallet actions. Budgeting its full amount conservatively does not mean it has already been spent.
The risk is not just a fee
- ERC-20 allowance authorizes a specific spender to transfer tokens up to an allowed amount. The approved spender is not the same as the wallet address or the destination vault.
- An unlimited allowance can create exposure far larger than a $1–$5 gas estimate. This calculator does not inspect, prove or revoke permissions, distinguish malicious spenders, simulate contracts or issue any token transaction.
- Some token contracts and spender flows differ from plain ERC-20 behavior. Before making an actual transaction, independently verify network, token contract, spender, requested amount and revocation semantics.
- If an approval fee is already included in your gas field, leave the extra field at $0. Do not double count it.
Relevant original references
AI-assisted original worked example, not an audit, investment recommendation, current gas quote, or user testimonial. There are no verified paid users of this specific tool.