Pump.fun, a Solana-based token issuance launchpad, has been operating under a model where all revenue generated was used to buy back and burn its native token, PUMP. However, after a review of this nine-month policy, the company has decided to adopt a new strategy. Going forward, half of the net revenue from its core products will be allocated to an irreversible smart contract that automatically buys and burns PUMP tokens, while the other half will be retained by the company for investments, hiring, marketing, and potential acquisitions.
This change in strategy comes after Pump.fun burned approximately 36% of the circulating supply of PUMP tokens over the past nine months. The company's co-founder, Alon Cohen, explained that this shift is necessary to ensure the long-term sustainability of the platform. Despite generating over $1 billion in lifetime revenue and using 100% of it for token buybacks, PUMP's price has remained stagnant, prompting the need for a new approach.
The revised strategy aims to strike a balance between token buybacks and operational costs, with the goal of driving growth and maintaining a competitive edge in the market. The move has been met with a positive response, with PUMP's price rising 6.9% in the 24 hours following the announcement.