Pump.fun, a Solana-based token launchpad, has been operating under a straightforward model where all revenue generated was used to purchase and burn its native token, PUMP. Theoretically, this continuous reduction in supply was intended to support the token's price and align its value with the platform's success.

However, following a review, the company has decided to abandon this approach due to its limited effectiveness. Instead, 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 automatically buy and burn PUMP tokens on the open market for the next year. The remaining half will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions.

This significant shift comes after Pump.fun burned approximately 36% of PUMP's circulating supply over the past nine months, amounting to all the tokens bought back during this period. The burn process involves the permanent removal of tokens from circulation, typically by sending them to an inaccessible crypto wallet.

This move is one of the largest single-event supply reductions in crypto history, measured by the share of circulating tokens. Co-founder Alon Cohen elaborated on the strategy change, emphasizing the need for the company to utilize half of its revenue for investments and operational costs to ensure Pump.fun's longevity. The decision is partly driven by PUMP's price performance, which has been trading sideways below its launch valuation for most of 2026, despite the substantial revenue generated and the previous buyback strategy. The new approach marks a turning point for Pump.fun and its token.

While there are bearish views, particularly concerning the cyclical nature of memecoin launchpad volume, there are also bullish perspectives. The removal of a significant portion of PUMP's supply from circulation, coupled with the commitment to ongoing burns, could potentially create a bullish setup for the token, especially if demand remains steady. Following the announcement, PUMP saw a 6.9% increase in value over 24 hours, with the project generating substantial cash flows, as indicated by its annualized fees of $802 million and revenue of $416 million, according to DefiLlama data.