Pump.fun, a Solana-based platform for token issuance, has been operating under a model where all revenue generated was used to buy back and burn its native token, PUMP. Theoretically, this continuous reduction in supply was intended to support the token's price and align its value with the platform's growth. However, after reviewing the effectiveness of this 100% buyback policy over the past nine months, the company has decided to alter its approach.
Instead, Pump.fun will now adopt a 50/50 revenue split. 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 designed to automatically purchase PUMP on the open market and burn it over the next year. The other half will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions.
This shift comes after Pump.fun successfully burned approximately 36% of PUMP's circulating supply, acquired through buybacks over the nine-month period, in two transactions on the Solana blockchain. The burn process involves the permanent removal of tokens from circulation by sending them to an unusable wallet address. This significant reduction in supply is one of the largest in crypto history in terms of the proportion of circulating tokens. According to Co-founder Alon Cohen, this adjustment is necessary to ensure the long-term viability of Pump.fun, as the business requires substantial investment in its products, workforce, marketing, and strategic acquisitions to thrive over the coming decades.
A key factor prompting this change is the performance of PUMP's price, which has largely traded below its initial valuation despite the previous buyback strategy and the generation of over $1 billion in revenue. Cohen emphasized the significance of this turning point for both PUMP and Pump.fun, highlighting the unprecedented scale at which the platform has conducted token buybacks. However, there are contrasting views on the implications of this policy shift.
On one hand, the cyclical nature of memecoin launchpad volume and its tendency to revert to the mean could impact Pump.fun's revenue, potentially leading to smaller token burns. Data from DefiLlama shows a decline in gross protocol revenue from $971.37 million in 2025 to an annualized $320 million in 2026, which could result in less significant burns. On the other hand, the ongoing burns could lead to a substantial reduction in the circulating supply of PUMP over time, especially if Pump.fun maintains a considerable revenue stream. This reduction in supply, coupled with steady demand, could potentially create a bullish scenario for the token.
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, according to DefiLlama, Pump.fun stands out as one of the few crypto projects generating substantial cash flows at scale.