I do a lot of farming/LP on the Avalanche chain. Mostly platforms like Trader Joe (liquidity pools + farms) and Platypus (single sided stablecoin farms).
When you deposit/supply the coins into the platforms, you are given the LP “receipt” token back. So now the actual coins supplies are staked in the pool (or LP tokens staked in the farm).
On debank you can revoke access to various tokens in your wallet, including LP tokens.
On Trader Joe these are JLP tokens and on Platypus they’re USDC-LP tokens (example).
Would revoking spend permissions for these coins add an extra lawyer of security if TraderJoe or Platypus were to be exploited?
Let’s say I’m providing liquidity for USDC-DAI pool in TraderJoe. I add both to the pool 50/50. Get my JLP tokens in return.
Then I:
– Revoke spend permission to the JLP tokens in debank (for the TraderJoe contract)
– Revoke spend permission to the USDC and DAI tokens as well (again for TraderJoe)
If I do this, are my coins protected in the event of an exploit to Trader Joe? Since they’re still linked back to my wallet, although I now hold LP tokens, by removing all those permissions above am I increasing my chance of my tokens being safe if Trader Joe was exploited / hacked.
Hope this makes sense. Just trying to wrap my head around the security of smart contract LPs/farms.
Revoke spend limit prevent your wallet from further draining if smart contract was exploited but your money in smart contract are no more so in this case your JLP tokens value will be zero.
If they are going to hack the LP, they won’t need your pool tokens. They will just drain the LP and your tokens are worthless.