Pump.fun, a Solana-based token issuance platform, has been operating under a model where all revenue generated was used to buy back and burn its native token, PUMP. The aim was to support the token's price by continually reducing its supply. However, after a nine-month review, the company has decided to alter this strategy. Going forward, Pump.fun will 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 purchase PUMP on the open market and burn it over the next year. The remaining half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions. This change comes after Pump.fun successfully burned approximately 36% of PUMP's circulating supply, acquired through buybacks over the past nine months.
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 percentage of circulating tokens. Alon Cohen, co-founder of Pump.fun, explained the rationale behind this shift, emphasizing the need for the company to invest in its growth and sustainability to ensure long-term viability. Despite the previous strategy of dedicating 100% of revenue to token buybacks, PUMP's price has largely traded sideways below its initial valuation in 2026, prompting the need for a strategic adjustment.
The new approach is anticipated to have a dual impact. On one hand, the reduced revenue allocation to buybacks, given the cyclical nature of memecoin launchpad volume, might result in smaller token burns. On the other hand, the ongoing burns, coupled with the significant reduction in circulating supply, could potentially create a bullish scenario for PUMP, especially if demand remains steady. The market has already shown a positive reaction, with PUMP rising by 6.9% in the 24 hours following the announcement.
With annualized fees of $802 million and revenue of $416 million, according to DefiLlama, Pump.fun is among the rare crypto projects generating substantial cash flows, underscoring its potential for sustained growth and development.