The Solana-based token issuance platform, Pump.fun, has been operating under a straightforward model where every dollar of revenue was allocated towards buying and burning 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 success. However, this approach has been reassessed, and the company has decided to adopt a new strategy. In a recent announcement, Pump.fun revealed that it would be transitioning to a 50/50 revenue split.
Under this new model, half of the net revenue generated from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be channeled into an irreversible smart contract. This contract will automatically purchase PUMP tokens on the open market and burn them over the next year. The remaining half will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions. This shift in strategy marks a significant departure from the previous policy, which dedicated 100% of revenue to token buybacks.
Over the past nine months, Pump.fun has successfully burned approximately 36% of PUMP's circulating supply, equivalent to all the tokens bought back from the open market. This burn is one of the largest single-event supply reductions in crypto history, in terms of the proportion of circulating tokens. Co-founder Alon Cohen explained the rationale behind this change, emphasizing the need for the company to allocate a portion of its revenue towards investment, hiring, and marketing to ensure the long-term sustainability of Pump.fun.
The decision to adjust the revenue allocation strategy is partly driven by the token's price performance. Despite using 100% of revenue for token buybacks over nine months and generating over $1 billion in lifetime revenue, PUMP has largely traded sideways below its launch valuation in 2026. The new strategy is seen as a turning point for both $PUMP and Pump.fun, with the co-founder providing context on the bigger picture and the platform's future direction. It is worth noting that the memecoin launchpad's volume is cyclical and mean-reverting.
According to DefiLlama data, Pump.fun's gross protocol revenue reached $971.37 million in 2025 but is currently annualizing to roughly $320 million in 2026. This decline in revenue may result in smaller token burns compared to the previous 100% buyback strategy. On the other hand, the ongoing burns, facilitated by locking 50% of future revenue into the buyback program, will continue to reduce the circulating supply of PUMP tokens. If Pump.fun maintains even half of its 2025 revenue, the sustained burns could retire a substantial portion of the remaining tokens over the next 12 months.
This reduction in supply, combined with steady demand, could create a bullish setup for the token. Following the announcement, PUMP experienced 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 is one of the rare crypto projects generating significant cash flows at scale.