Pump.fun, a Solana-based token issuance platform, has been operating under a straightforward model where every dollar of 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, after reviewing the effectiveness of this 100% buyback policy over the past nine months, the company has decided to adopt a new approach. In a recent announcement, Pump.fun revealed that it will now allocate its net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - into two equal parts.
One half will be dedicated to buying back PUMP tokens on the open market and burning them over the next year, while the other half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions. This shift in strategy comes after Pump.fun burned approximately 36% of PUMP's circulating supply, acquired through buybacks over the past nine months, in two transactions on the Solana network. The burn process involves the permanent removal of tokens from circulation, typically by sending them to an inaccessible cryptocurrency wallet. This significant reduction in supply is one of the largest in crypto history in terms of the proportion of circulating tokens.
Co-founder Alon Cohen explained the rationale behind this change, stating that the company needs to allocate a portion of its revenue towards investment in products, hiring, marketing, and potential acquisitions to ensure the long-term sustainability of Pump.fun. The decision to revise the revenue allocation strategy is partly driven by PUMP's price performance, which has largely traded sideways below its initial valuation despite the company's significant revenue generation and the previous buyback policy. Over the past nine months, 100% of Pump.fun's revenue was dedicated to token buybacks, a scale unprecedented in the crypto industry. However, the company's revenue has been subject to fluctuations, with a notable decline from $971.37 million in 2025 to an annualized $320 million in 2026, according to data from DefiLlama.
The bear case for this strategy is that the launchpad's volume is cyclical and mean-reverting, which could result in smaller token burns due to declining revenue. On the other hand, the bull case argues that the significant reduction in circulating supply, combined with the ongoing burns, could lead to a meaningful decrease in the remaining tokens over the next 12 months, potentially creating a bullish setup for the token.
Following the announcement, PUMP experienced a 6.9% increase in value over 24 hours. With annualized fees of $802 million and revenue of $416 million, as reported by DefiLlama, Pump.fun stands out as one of the rare crypto projects generating substantial cash flows at scale.