Token Permit

Definition ∞ A token permit is a mechanism that allows a user to authorize a smart contract to spend their tokens on their behalf, without requiring an on-chain transaction for the approval itself. Instead, the user signs an off-chain message, which the smart contract can then verify to confirm authorization. This approach can save users on transaction fees and improve user experience by streamlining interactions with decentralized applications. It offers a more efficient way to manage token allowances.
Context ∞ Token permits are an important technical advancement in decentralized finance, addressing the issue of multiple transaction approvals for token spending. Discussions often concern the security considerations of off-chain signatures and the potential for misuse if not implemented carefully. Future developments involve wider adoption of permit standards across various tokens and protocols, enhancing the overall usability and efficiency of DeFi.