Pump.fun, a Solana-based token issuance launchpad, is abandoning its previous model of allocating 100% of revenue towards buying and burning its native token, PUMP. This approach, which has been in place for nine months, was intended to support the token's price by continuously reducing its supply.
However, the company has now decided to adopt a new strategy, dividing its revenue equally between token buybacks and operational expenses. Half of the revenue generated from Pump.fun's core products, including the bonding curve, PumpSwap, and Terminal, will be channeled into an irreversible smart contract to purchase and burn PUMP tokens on the open market. The remaining half will be retained by the company to fund product development, hiring, marketing, and potential acquisitions. 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 crypto history.
According to co-founder Alon Cohen, this change in strategy 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 largely traded sideways below its launch valuation in 2026. The new strategy aims to strike a balance between supporting the token's price and investing in the company's growth. The price chart has been a key factor in this decision, with PUMP spending most of 2026 trading below its launch valuation.
Cohen explained that the business needs to retain half of its revenue to invest in product development, hiring, and marketing to ensure the platform's survival for decades to come. The move has both bullish and bearish implications. On the bearish side, memecoin launchpad volume is cyclical and mean-reverting, with Pump.fun's gross protocol revenue declining from $971.37 million in 2025 to an annualized $320 million in 2026, according to DefiLlama data. This reduction in revenue could result in smaller token burns.
On the bullish side, the removal of 36% of PUMP's circulating supply and the ongoing burns of 50% of future revenue could lead to a significant reduction in supply, potentially creating a bullish setup for the token. Following the announcement, PUMP's price rose 6.9% within 24 hours, with annualized fees of $802 million and revenue of $416 million, as per DefiLlama, positioning Pump.fun among the rare crypto projects generating substantial cash flows at scale.