The Solana-based token issuance platform, Pump.fun, has been operating under a straightforward model where every dollar earned was used to purchase and burn its native token, PUMP, with the goal of supporting the token's price and aligning its value with the platform's success. However, after reviewing the outcomes of this nine-month, 100% buyback policy, the company has decided to change its strategy. Moving forward, Pump.fun will implement a 50/50 revenue split. Half of the net revenue generated from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be allocated to an irreversible smart contract designed to automatically buy PUMP on the open market and burn it over the next year.
The remaining half will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions. This new approach replaces the previous policy where 100% of revenue was dedicated to buying back and burning PUMP tokens. Over the past nine months, Pump.fun has burned approximately 36% of PUMP's circulating supply, which it had purchased from the open market, in two transactions on the Solana network.
This burn process involves the permanent removal of tokens from circulation by sending them to a wallet address that is not controlled by anyone. The scale of this burn is notable, representing one of the largest single-event supply reductions in cryptocurrency history in terms of the proportion of circulating tokens. Co-founder Alon Cohen explained the rationale behind this strategic shift in a post, highlighting the need for the company to allocate half of its revenue towards investments that will ensure the long-term sustainability and growth of Pump.fun.
The decision comes at a time when PUMP's price has been trading sideways below its initial valuation for most of 2026, despite the significant revenue generated and the previous buyback strategy. The new approach is seen as a turning point for both $PUMP and Pump.fun, aiming to provide a more balanced and sustainable path forward. The price chart of PUMP reflects the challenges faced by the token, with its value failing to surpass its launch valuation despite the substantial buybacks.
The change in strategy is also influenced by the cyclical nature of memecoin launchpad volume, which can be subject to mean reversion. According to data from DefiLlama, Pump.fun's gross protocol revenue was $971.37 million in 2025 but is projected to be around $320 million in 2026, indicating a decline.
The bear case for this new strategy is that the reduced revenue, now split 50/50, will result in smaller token burns compared to the larger burns achieved with 100% of peak revenue. On the other hand, the bull case focuses on the mathematics of the remaining tokens in circulation.
By burning 36% of the circulating PUMP tokens, a significant portion of the potential supply that could have entered the market has been removed. Furthermore, dedicating 50% of future revenue to continued burns means that more tokens will be permanently destroyed every week, regardless of future decisions. If Pump.fun can maintain even half of its 2025 revenue levels, the ongoing burns could retire a substantial portion of the remaining tokens over the next 12 months.
This reduction in supply, coupled with steady demand, could create a bullish scenario for the token that it may not have seen since its launch. Following the announcement, PUMP saw a 6.9% increase in value over 24 hours. With annualized fees of $802 million and revenue of $416 million, as per DefiLlama, Pump.fun stands out as one of the rare cryptocurrency projects that generate substantial cash flows at scale.