In a significant change of strategy, Solana-based token issuance platform Pump.fun is abandoning its previous model of dedicating 100% of revenue to buying and burning its native token, PUMP. This approach, which had been in place for nine months, aimed to support the token's price by continually reducing its supply. However, the company has now decided to adopt a more balanced approach, splitting its revenue evenly between token buybacks and operational costs, including product development, hiring, marketing, and potential acquisitions. This shift comes after the company reviewed its previous strategy and determined it was not yielding the desired results.
Over the past nine months, Pump.fun had burned approximately 36% of PUMP's circulating supply, which is one of the largest single-event supply reductions in crypto history. The company's co-founder, Alon Cohen, explained that the change is necessary to ensure the long-term sustainability of the platform.
Despite generating over $1 billion in lifetime revenue and using 100% of it for token buybacks, PUMP's price has remained largely stagnant. The new strategy will see half of the company's revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - allocated to an irreversible smart contract that will automatically buy and burn PUMP tokens on the open market for the next year.
The other half will be retained by the company to support its operations and drive growth. This change in strategy has been prompted by the need for the company to adapt to changing market conditions and ensure its continued success. The price of PUMP has risen by 6.9% in the 24 hours following the announcement, with the token's annualized fees and revenue standing at $802 million and $416 million, respectively, according to DefiLlama data.