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. The goal was to reduce the token's supply, thereby increasing its value. However, after reviewing the effectiveness of this strategy, the company has decided to adopt a new approach.
Going forward, half of the revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be allocated to an irreversible smart contract that automatically buys and burns PUMP tokens on the open market. The remaining half will be retained by the company to invest in product development, hiring, marketing, and potential acquisitions.
This change in strategy comes after Pump.fun burned approximately 36% of PUMP's circulating supply over the past nine months, with the tokens being permanently removed from circulation. Co-founder Alon Cohen explained that this shift is necessary to ensure the long-term sustainability of the business. Despite generating over $1 billion in lifetime revenue and using 100% of it for token buybacks, PUMP's price has remained stagnant.
The new policy aims to strike a balance between token burn and business operations, with the potential to create a bullish setup for the token in the long run.