Pump.fun, a Solana-based token issuance platform, has been operating under a model where all revenue generated was used to purchase and burn its native token, PUMP. This strategy, in theory, aimed to support the token's price by consistently reducing its supply.
However, after reviewing the effectiveness of this 100% buyback policy over the past nine months, the company has decided to adopt a new approach. Going forward, Pump.fun will split 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 dedicated to buying back PUMP tokens on the open market and burning them, a process that will be automated through an irreversible smart contract for the next year. The other half will be retained by the company to fund product development, hiring, marketing efforts, and potential strategic acquisitions. This new 50/50 split strategy marks a significant shift from the previous policy, where 100% of revenue was allocated towards token buybacks. Over the past nine months, Pump.fun has burned approximately 36% of PUMP's circulating supply, which it had purchased from the open market.
This burn is one of the largest single-event supply reductions in cryptocurrency history, in terms of the proportion of circulating tokens. The decision to change the revenue allocation strategy was explained by co-founder Alon Cohen, who emphasized the need for the company to retain half of its revenue to ensure the long-term sustainability and growth of Pump.fun. The move comes as PUMP's price has largely traded sideways below its launch valuation in 2026, despite the significant buybacks.
The change in strategy is seen as a turning point for both PUMP and Pump.fun, with potential implications for the token's price and the platform's future development. While the new strategy may result in smaller token burns due to declining revenue, it also means that a significant portion of the remaining tokens will be permanently removed from circulation over time, potentially setting up a bullish scenario for the token.