EPP/Authorization code is used as a protection mechanism to ensure that only the rightful domain owner can control the transfer of the domain registration. It is one of the essential security measures against unauthorized transfers.
Some hosting companies may tell you that this is the only way to verify the domain for using hosting with them, but please be aware that it should be requested only if domain registration is being transferred to them, and there are usually alternative methods of verification like change of nameservers, etc.
If the EPP code is provided to your hosting provider, your domain may be completely transferred to them.
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General Domain Transfer Steps and Tips
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