Pump.fun, a Solana-based token 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, in theory, aimed to support the token's price by continuously reducing its supply.
However, after a nine-month review, the company has decided to alter this strategy. Instead, Pump.fun will now adopt a 50/50 revenue split. Half of the net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be allocated to an irreversible smart contract designed to automatically purchase PUMP tokens on the open market and burn them over the next year.
The remaining half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions. This shift comes after Pump.fun successfully burned approximately 36% of PUMP's circulating supply, acquired through buybacks 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 an inaccessible wallet address.
This significant supply reduction is one of the largest in crypto history in terms of the proportion of circulating tokens. According to Alon Cohen, co-founder of Pump.fun, the change in strategy is necessary to ensure the company's long-term viability.
Cohen emphasized that retaining half of the revenue is crucial for investing in products, talent acquisition, marketing, and strategic acquisitions to secure Pump.fun's future for decades to come. The decision to adjust the token burn strategy is partly attributed to PUMP's price performance. Despite using 100% of its revenue for token buybacks over nine months and generating over $1 billion in lifetime revenue, PUMP has largely traded sideways below its initial valuation throughout 2026.
The new strategy marks a significant turning point for both PUMP and Pump.fun. In a statement, Cohen provided context on the company's direction, highlighting that no other crypto platform has undertaken token buybacks at such a scale. However, the cyclical nature of memecoin launchpad volume, which tends to mean-revert, presents a bear case for the company's revenue. Data from DefiLlama shows that while Pump.fun's gross protocol revenue reached $971.37 million in 2025, it is annualizing to approximately $320 million in 2026.
This decline in revenue means that the 50% allocated to token burns will result in smaller burns compared to the 100% of peak revenue previously dedicated to this purpose. On the other hand, the bull case centers on the mathematics of the remaining tokens in circulation.
By burning 36% of the circulating PUMP tokens, 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 of 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 scenario for the token, potentially presenting an opportunity that has not existed 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.