Pump.fun, a Solana-based token issuance launchpad, has been operating under a unique model where all revenue generated was used to buy back and burn its native token, PUMP. The goal was to reduce the token's supply and, in theory, boost its price by aligning its value with the platform's success. However, after reviewing the effectiveness of this strategy over the past nine months, the company has decided to adopt a new approach.
Going forward, Pump.fun will split its revenue evenly between token buybacks and operational costs, including product investment, hiring, marketing, and potential acquisitions. This shift marks a significant change from the previous policy, where 100% of revenue was allocated to buying back and burning PUMP tokens.
The company has already burned approximately 36% of the token's circulating supply, which is one of the largest single-event supply reductions in crypto history. According to Co-founder Alon Cohen, the change in strategy is necessary to ensure the long-term sustainability of the business, allowing Pump.fun to thrive for decades to come.
The decision comes as PUMP's price has been trading sideways below its launch valuation, despite the company generating over $1 billion in lifetime revenue. While some may view this change as a bearish sign, others see it as a bullish setup, as the ongoing burns will continue to reduce the token's supply, potentially leading to a more favorable demand-supply dynamic.
In the 24 hours following the announcement, PUMP's price rose by 6.9%, with the company's annualized fees and revenue standing at $802 million and $416 million, respectively, according to DefiLlama.