Pump.fun, a Solana-based platform for token issuance, has been operating under a straightforward model where all revenue generated was used to buy back and burn its native token, PUMP. Theoretically, this constant reduction in supply was intended to support the token's price and align its value with the platform's success. However, this approach is being revised due to a review indicating it was not fully beneficial for the company. In a recent announcement, the firm stated it would 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 remaining half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions, marking a significant shift from the previous 100% allocation to buybacks. 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 Solana. This burn, referring to the permanent removal of tokens from circulation, is notable as one of the largest single-event supply reductions in crypto history by share of circulating tokens.
Co-founder Alon Cohen elaborated on this strategic change, emphasizing the need for the company to retain half of its revenue for investments and operational costs to ensure the long-term viability of Pump.fun. The decision comes as PUMP has been trading sideways below its launch valuation for most of 2026, despite the previous buyback strategy and generating over $1 billion in lifetime revenue. The new approach is seen as a turning point for both $PUMP and the platform.
However, there are differing perspectives on the impact of this change. On one hand, the cyclical nature of memecoin launchpad volume and the significant decline in Pump.fun's gross protocol revenue from $971.37 million in 2025 to an annualized $320 million in 2026, as per DefiLlama data, could suggest that the reduced revenue might lead to smaller burns, potentially affecting the token's price. On the other hand, the burn of 36% of the circulating PUMP supply and the commitment to continue burning tokens with 50% of future revenue could remove a substantial amount of supply from the market, potentially leading to a bullish scenario if demand remains steady.
Following the announcement, PUMP saw a 6.9% increase over 24 hours, with the platform generating significant cash flows, as indicated by its annualized fees of $802 million and revenue of $416 million, according to DefiLlama.