Pump.fun, a Solana-based token issuance launchpad, has been operating under a unique model where all revenue generated was used to buy back and burn its native token, PUMP. This approach, which has been in place for nine months, aimed to reduce the token's supply and theoretically increase its value by aligning it with the platform's success. However, after reviewing the effectiveness of this strategy, the company has decided to adopt a new approach.
Going forward, Pump.fun will split its revenue evenly between token buybacks and operational expenses, including product development, hiring, marketing, and potential acquisitions. The previous policy saw the company allocate 100% of its revenue towards buying back and burning PUMP tokens.
Over the past nine months, Pump.fun has burned approximately 36% of PUMP's circulating supply, which is one of the largest single-event supply reductions in the history of cryptocurrency. According to Alon Cohen, co-founder of Pump.fun, the change in strategy is necessary to ensure the long-term sustainability of the platform. The company needs to allocate a portion of its revenue towards operational expenses to maintain its growth and development. The decision to shift the token burn strategy comes as PUMP's price has remained stagnant despite the significant buybacks.
The token has spent most of 2026 trading sideways below its launch valuation, despite Pump.fun generating over $1 billion in lifetime revenue. While the new strategy may have a bearish impact on the token's price in the short term, it is expected to have a positive effect in the long term. By locking 50% of its future revenue into token buybacks, Pump.fun will continue to reduce the supply of PUMP tokens, which could lead to an increase in value if demand remains steady. According to DefiLlama data, Pump.fun's gross protocol revenue totaled $971.37 million in 2025 but has annualized to roughly $320 million so far in 2026.
The reduced revenue may result in smaller token burns, but the ongoing buybacks will still have a significant impact on the token's supply. If Pump.fun can maintain its current revenue levels, the continued token burns could lead to a meaningful reduction in the token's supply over the next 12 months.
This, combined with steady demand, could create a bullish setup for the token. Following the announcement, PUMP's price rose by 6.9% in 24 hours, and its annualized fees and revenue continue to demonstrate the platform's ability to generate significant cash flows.