diff --git a/packages/blue-sdk/src/vault/v2/VaultV2Adapter.ts b/packages/blue-sdk/src/vault/v2/VaultV2Adapter.ts
index bafa516a..3c48b8fb 100644
--- a/packages/blue-sdk/src/vault/v2/VaultV2Adapter.ts
+++ b/packages/blue-sdk/src/vault/v2/VaultV2Adapter.ts
@@ -3,6 +3,7 @@ import type { BigIntish } from "../../types";
 import type { CapacityLimit } from "../../utils";
 
 export interface IVaultV2Adapter {
+  type: string;
   address: Address;
   parentVault: Address;
   adapterId: Hash;
@@ -10,17 +11,20 @@ export interface IVaultV2Adapter {
 }
 
 export abstract class VaultV2Adapter implements IVaultV2Adapter {
+  public readonly type: string;
   public readonly address: Address;
   public readonly parentVault: Address;
   public readonly adapterId: Hash;
   public skimRecipient: Address;
 
   constructor({
+    type,
     address,
     parentVault,
     adapterId,
     skimRecipient,
   }: IVaultV2Adapter) {
+    this.type = type;
     this.address = address;
     this.parentVault = parentVault;
     this.adapterId = adapterId;
diff --git a/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1Adapter.ts b/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1Adapter.ts
index faa75600..980d8d3c 100644
--- a/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1Adapter.ts
+++ b/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1Adapter.ts
@@ -11,7 +11,8 @@ import { VaultV2Adapter } from "./VaultV2Adapter";
 import type { IAccrualVaultV2Adapter, IVaultV2Adapter } from "./VaultV2Adapter";
 
 export interface IVaultV2MorphoMarketV1Adapter
-  extends Omit<IVaultV2Adapter, "adapterId"> {
+  extends Omit<IVaultV2Adapter, "adapterId" | "type"> {
+  type?: "VaultV2MorphoMarketV1Adapter";
   marketParamsList: IMarketParams[];
 }
 
@@ -19,6 +20,8 @@ export class VaultV2MorphoMarketV1Adapter
   extends VaultV2Adapter
   implements IVaultV2MorphoMarketV1Adapter
 {
+  public declare readonly type: "VaultV2MorphoMarketV1Adapter";
+
   static adapterId(address: Address) {
     return keccak256(
       encodeAbiParameters(
@@ -54,6 +57,7 @@ export class VaultV2MorphoMarketV1Adapter
   }: IVaultV2MorphoMarketV1Adapter) {
     super({
       ...vaultV2Adapter,
+      type: "VaultV2MorphoMarketV1Adapter",
       adapterId: VaultV2MorphoMarketV1Adapter.adapterId(vaultV2Adapter.address),
     });
 
diff --git a/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1AdapterV2.ts b/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1AdapterV2.ts
index a3b0ff07..c6b6f64d 100644
--- a/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1AdapterV2.ts
+++ b/packages/blue-sdk/src/vault/v2/VaultV2MorphoMarketV1AdapterV2.ts
@@ -6,7 +6,8 @@ import { VaultV2Adapter } from "./VaultV2Adapter";
 import type { IAccrualVaultV2Adapter, IVaultV2Adapter } from "./VaultV2Adapter";
 
 export interface IVaultV2MorphoMarketV1AdapterV2
-  extends Omit<IVaultV2Adapter, "adapterId"> {
+  extends Omit<IVaultV2Adapter, "adapterId" | "type"> {
+  type?: "VaultV2MorphoMarketV1AdapterV2";
   marketIds: MarketId[];
   adaptiveCurveIrm: Address;
   supplyShares: Record<MarketId, bigint>;
@@ -16,6 +17,8 @@ export class VaultV2MorphoMarketV1AdapterV2
   extends VaultV2Adapter
   implements IVaultV2MorphoMarketV1AdapterV2
 {
+  public declare readonly type: "VaultV2MorphoMarketV1AdapterV2";
+
   static adapterId(address: Address) {
     return keccak256(
       encodeAbiParameters(
@@ -55,6 +58,7 @@ export class VaultV2MorphoMarketV1AdapterV2
   }: IVaultV2MorphoMarketV1AdapterV2) {
     super({
       ...vaultV2Adapter,
+      type: "VaultV2MorphoMarketV1AdapterV2",
       adapterId: VaultV2MorphoMarketV1AdapterV2.adapterId(
         vaultV2Adapter.address,
       ),
diff --git a/packages/blue-sdk/src/vault/v2/VaultV2MorphoVaultV1Adapter.ts b/packages/blue-sdk/src/vault/v2/VaultV2MorphoVaultV1Adapter.ts
index 0d774fa4..6a079b7d 100644
--- a/packages/blue-sdk/src/vault/v2/VaultV2MorphoVaultV1Adapter.ts
+++ b/packages/blue-sdk/src/vault/v2/VaultV2MorphoVaultV1Adapter.ts
@@ -3,7 +3,8 @@ import { type Address, type Hex, encodeAbiParameters, keccak256 } from "viem";
 import { VaultV2Adapter } from "./VaultV2Adapter";
 
 export interface IVaultV2MorphoVaultV1Adapter
-  extends Omit<IVaultV2Adapter, "adapterId"> {
+  extends Omit<IVaultV2Adapter, "adapterId" | "type"> {
+  type?: "VaultV2MorphoVaultV1Adapter";
   morphoVaultV1: Address;
 }
 
@@ -15,6 +16,8 @@ export class VaultV2MorphoVaultV1Adapter
   extends VaultV2Adapter
   implements IVaultV2MorphoVaultV1Adapter
 {
+  public declare readonly type: "VaultV2MorphoVaultV1Adapter";
+
   static adapterId(address: Address) {
     return keccak256(
       encodeAbiParameters(
@@ -32,6 +35,7 @@ export class VaultV2MorphoVaultV1Adapter
   }: IVaultV2MorphoVaultV1Adapter) {
     super({
       ...vaultV2Adapter,
+      type: "VaultV2MorphoVaultV1Adapter",
       adapterId: VaultV2MorphoVaultV1Adapter.adapterId(vaultV2Adapter.address),
     });
 
diff --git a/packages/bundler-sdk-viem/src/actions.ts b/packages/bundler-sdk-viem/src/actions.ts
index 02c7ec74..be6676f5 100644
--- a/packages/bundler-sdk-viem/src/actions.ts
+++ b/packages/bundler-sdk-viem/src/actions.ts
@@ -22,6 +22,7 @@ import {
 } from "@morpho-org/blue-sdk";
 import { Time, getValue } from "@morpho-org/morpho-ts";
 import {
+  APPROVE_ONLY_ONCE_TOKENS,
   MAX_TOKEN_APPROVALS,
   type MaybeDraft,
   type Operation,
@@ -52,6 +53,7 @@ const encodeErc20Approval = (
   token: Address,
   spender: Address,
   amount: bigint,
+  sender: Address,
   data: MaybeDraft<SimulationState>,
 ) => {
   const { chainId } = data;
@@ -63,6 +65,37 @@ const encodeErc20Approval = (
 
   const txRequirements: TransactionRequirement[] = [];
 
+  // Handle USDT-like tokens that require reset to 0 before changing allowance.
+  if (APPROVE_ONLY_ONCE_TOKENS[chainId]?.includes(token) && amount > 0n) {
+    const holding = data.tryGetHolding(sender, token);
+    const addresses = getChainAddresses(chainId);
+    // Check if there's an existing allowance to the spender.
+    // We need to check the raw allowance since this is a direct ERC20 approval.
+    const existingAllowance =
+      spender === addresses.bundler3.generalAdapter1
+        ? holding?.erc20Allowances["bundler3.generalAdapter1"]
+        : spender === addresses.permit2
+          ? holding?.erc20Allowances.permit2
+          : spender === addresses.morpho
+            ? holding?.erc20Allowances.morpho
+            : undefined;
+
+    if (existingAllowance != null && existingAllowance > 0n) {
+      txRequirements.push({
+        type: "erc20Approve",
+        args: [token, spender, 0n],
+        tx: {
+          to: token,
+          data: encodeFunctionData({
+            abi: erc20Abi,
+            functionName: "approve",
+            args: [spender, 0n],
+          }),
+        },
+      });
+    }
+  }
+
   txRequirements.push({
     type: "erc20Approve",
     args: [token, spender, amount],
@@ -218,7 +251,13 @@ export const encodeOperation = (
       if (!supportsSignature && spender === permit2) break;
 
       requirements.txs.push(
-        ...encodeErc20Approval(operation.address, spender, amount, dataBefore),
+        ...encodeErc20Approval(
+          operation.address,
+          spender,
+          amount,
+          sender,
+          dataBefore,
+        ),
       );
 
       break;
@@ -337,6 +376,7 @@ export const encodeOperation = (
             operation.address,
             spender,
             amount,
+            sender,
             dataBefore,
           ),
         );
@@ -421,6 +461,7 @@ export const encodeOperation = (
           operation.address,
           generalAdapter1,
           amount,
+          sender,
           dataBefore,
         ),
       );
diff --git a/packages/bundler-sdk-viem/src/operations.ts b/packages/bundler-sdk-viem/src/operations.ts
index c7ccb910..5a54480b 100644
--- a/packages/bundler-sdk-viem/src/operations.ts
+++ b/packages/bundler-sdk-viem/src/operations.ts
@@ -134,19 +134,6 @@ export const populateInputTransfer = (
       },
     });
   else if (useSimpleTransfer) {
-    if (
-      APPROVE_ONLY_ONCE_TOKENS[data.chainId]?.includes(address) &&
-      erc20Allowances["bundler3.generalAdapter1"] > 0n
-    )
-      operations.push({
-        type: "Erc20_Approve",
-        sender: from,
-        address,
-        args: {
-          amount: 0n,
-          spender: generalAdapter1,
-        },
-      });
     operations.push({
       type: "Erc20_Approve",
       sender: from,
@@ -172,19 +159,6 @@ export const populateInputTransfer = (
   // Simple permit is not supported: fallback to Permit2.
   else {
     if (erc20Allowances.permit2 < amount) {
-      if (
-        APPROVE_ONLY_ONCE_TOKENS[data.chainId]?.includes(address) &&
-        erc20Allowances.permit2 > 0n
-      )
-        operations.push({
-          type: "Erc20_Approve",
-          sender: from,
-          address,
-          args: {
-            amount: 0n,
-            spender: permit2,
-          },
-        });
       operations.push({
         type: "Erc20_Approve",
         sender: from,