In a significant change of direction, Solana-based token issuance platform Pump.fun is abandoning its previous model of dedicating all revenue to buying and burning its native token, PUMP. This approach, which had been in place for nine months, aimed to consistently reduce the token's supply and theoretically support its price by aligning the token's value with the platform's success. However, after reviewing the outcomes of this strategy, the company has decided to adopt a new approach. Going forward, Pump.fun will divide its net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - evenly between two purposes.
Half of the revenue will be channeled into an irreversible smart contract designed to automatically purchase PUMP on the open market and burn it over the next year. The other half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions.
This strategic shift comes after Pump.fun burned approximately 36% of PUMP's circulating supply, which it had bought back over the past nine months, in two transactions on the Solana blockchain. The burn process involves the permanent removal of tokens from circulation, typically by sending them to a wallet address that is not controlled by anyone. This move is one of the largest single-event supply reductions in the history of cryptocurrency, measured by the share of circulating tokens.
Alon Cohen, co-founder of Pump.fun, explained the rationale behind this change in a post, emphasizing the need for the company to allocate half of its revenue towards investments in products, hiring, marketing, and potential acquisitions to ensure the long-term viability of Pump.fun. The decision to alter the revenue allocation strategy is partly driven by the price performance of PUMP, which has largely traded sideways below its launch valuation in 2026, despite the company generating over $1 billion in lifetime revenue and dedicating 100% of its revenue to token buybacks for nine months.
The new strategy marks a significant turning point for both PUMP and Pump.fun, as the company seeks to provide more context on its future direction and goals. Over the past nine months, Pump.fun has been unique in crypto for using 100% of its revenue for buybacks, a scale unmatched by other platforms.
However, this approach has also been accompanied by a bear case, given that memecoin launchpad volume tends to be cyclical and mean-reverting. Data from DefiLlama shows that while Pump.fun's gross protocol revenue reached $971.37 million in 2025, it is annualizing to roughly $320 million in 2026. The reduction in revenue means that the 50% allocated to burns will result in smaller burns compared to the 100% of peak revenue.
On the other hand, the bull case focuses on the mathematics of the remaining tokens. By burning 36% of the circulating PUMP, a substantial block of supply that could have entered the market has been removed. Furthermore, locking 50% of future revenue into burns ensures that more tokens will be permanently destroyed every week, regardless of future decisions.
If Pump.fun continues to generate revenue at even half the level it did in 2025, the ongoing burns could significantly reduce the remaining token supply over the next 12 months. This reduction in supply, coupled with steady demand, could create a bullish setup for the token that it may not have seen since its launch. Following the announcement, PUMP saw a 6.9% increase in value over 24 hours.
According to 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.