Pump.fun, a Solana-based token issuance launchpad, has been operating under a singular model: allocating every dollar of revenue towards buying and burning its native token, PUMP. Theoretically, this constant reduction in supply was intended to bolster the token's price and align its value with the platform's success.
However, after reassessing the previous policy, the company has decided to adopt a new approach. In an X post, Pump.fun announced that it would be shifting to a 50/50 revenue split.
Half of the net revenue generated from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be funneled into an irreversible smart contract, which will automatically purchase PUMP on the open market and burn it over the next year. The remaining half will be retained by the company to invest in product development, hiring, marketing, and potential acquisitions. This new 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 burned approximately 36% of PUMP's circulating supply, equivalent to all the tokens purchased 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 elaborated on the rationale behind this shift, stating that the business requires the other half of the revenue to ensure the long-term sustainability of Pump.fun. The decision to alter the token burn strategy can be attributed, in part, to PUMP's price performance.
Despite generating over $1 billion in lifetime revenue and dedicating 100% of revenue to token buybacks for nine months, PUMP has largely traded sideways below its launch valuation in 2026. In a follow-up post, Cohen provided additional context, highlighting the significance of this turning point for both $PUMP and Pump.fun. Over the past nine months, the platform has been unique in allocating 100% of revenue to buybacks.
However, the current bear case suggests that memecoin launchpad volume is cyclical and mean-reverting. According to DefiLlama data, Pump.fun's gross protocol revenue totaled $971.37 million in 2025 but is annualizing to roughly $320 million in 2026. The reduced revenue will result in smaller token burns compared to the previous 100% of peak revenue.
On the other hand, the bull case focuses on the math behind the remaining tokens. Burning 36% of the circulating PUMP supply removes a substantial block of tokens that could have potentially entered the market.
By locking 50% of future revenue into token burns, more tokens will be permanently destroyed every week, regardless of the team's future decisions. If Pump.fun continues to generate even half of its 2025 revenue, the ongoing burns would likely retire a significant 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, potentially unseen since its launch.
Following the announcement, PUMP experienced a 6.9% increase in value over 24 hours. As per DefiLlama, Pump.fun's annualized fees stand at $802 million, with revenue at $416 million, placing it among the rare crypto projects that generate substantial cash flows at scale.