Pump.fun, a Solana-based token issuance launchpad, has been operating under a model where all revenue was used to buy and burn its native token, PUMP. However, this approach has been reassessed, and the company has decided to adopt a new strategy.
Going forward, half of the net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be allocated to an irreversible smart contract for buying and burning PUMP tokens on the open market. The remaining half will be utilized for product development, hiring, marketing, and potential acquisitions. Over the past nine months, Pump.fun had burned approximately 36% of PUMP's circulating supply, which is one of the largest single-event supply reductions in crypto history. The decision to change the revenue allocation was made to ensure the long-term sustainability of the platform.
Co-founder Alon Cohen emphasized the need for a balanced approach, stating that the company requires revenue for investments, hiring, and marketing to secure its future. The price of PUMP has been trading sideways below its launch valuation, despite the previous 100% revenue allocation to token buybacks. The new strategy aims to strike a balance between token supply reduction and platform development.
While the bear case suggests that the launchpad's revenue is cyclical and may decline, the bull case argues that the ongoing burns will reduce the token supply, potentially leading to a bullish setup. Following the announcement, PUMP's price increased by 6.9% within 24 hours.