Pump.fun, a Solana-based token launchpad, has been operating under a model where all revenue was used to buy and burn its native token, PUMP. However, after reviewing the effectiveness of this strategy, the company has decided to adopt a new approach. Going forward, half of the revenue generated 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 fund product development, hiring, marketing, and potential acquisitions.
This shift in strategy comes after Pump.fun burned approximately 36% of PUMP's circulating supply over the past nine months, which is one of the largest single-event supply reductions in crypto history. According to co-founder Alon Cohen, this change is necessary to ensure the long-term sustainability of the platform. Despite generating over $1 billion in lifetime revenue and using 100% of revenue for token buybacks, PUMP's price has remained stagnant, trading sideways below its launch valuation for most of 2026. The new strategy aims to strike a balance between token burns and operational costs, with the goal of keeping Pump.fun alive for decades to come.
While the move has been met with optimism, with PUMP rising 6.9% in the 24 hours following the announcement, there are also concerns that the reduced revenue allocation for token burns could have a negative impact on the token's price. Nevertheless, the ongoing burns are expected to retire a significant portion of the remaining tokens over the next 12 months, potentially forming a bullish setup for the token.