The Solana-based token issuance platform, Pump.fun, has been operating under a unique model where all revenue generated was used to buy and burn its native token, PUMP. This strategy, in theory, aimed to consistently support the token's price by reducing its supply. However, after reviewing the effectiveness of this 100% buyback policy over the past nine months, the company has decided to adopt a new approach.
Pump.fun will now divide its revenue equally between buying back and burning PUMP tokens and investing in operational costs, including product development, hiring, marketing, and potential acquisitions. This shift comes after the company burned approximately 36% of PUMP's circulating supply, which was acquired through buybacks over the past nine months.
The irreversible smart contract will continue to automatically purchase and burn PUMP tokens on the open market for the next year, using half of the net revenue from Pump.fun's core products: the bonding curve, PumpSwap, and Terminal. The other half will be retained by the company to ensure its long-term viability and growth. This strategic change is driven by the need for sustainable operations and the realization that the previous model, despite burning a significant portion of the token's supply, did not yield the expected price support due to the cyclical nature of memecoin launchpad volume.
The new strategy aims to balance token supply reduction with operational investment, potentially setting a bullish tone for PUMP's future, especially if the platform continues to generate substantial revenue.