Pump.fun, a Solana-based platform for token issuance, has been operating under a straightforward model where all revenue was channeled into buying back and burning its native token, PUMP, with the aim of supporting the token's price and aligning its value with the platform's success. However, after reviewing the effectiveness of this nine-month policy, the company has decided to adopt a new approach.
Going forward, Pump.fun will divide its net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - into two equal parts. Half of the revenue will be allocated to an irreversible smart contract designed to automatically purchase PUMP tokens on the open market and burn them over the next year, while the other half will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions.
This strategic shift comes after Pump.fun burned approximately 36% of PUMP's circulating supply, which it had 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 transferring them to a wallet address that is not under anyone's control. This significant reduction in circulating supply is one of the largest in crypto history in terms of the proportion of tokens burned. Co-founder Alon Cohen explained the rationale behind this change, emphasizing the need for the company to retain half of its revenue to ensure the long-term viability and growth of Pump.fun.
The decision is partly driven by the performance of PUMP, which has been trading sideways below its initial valuation for most of 2026, despite the company's substantial revenue generation and the previous buyback strategy. The new approach is expected to have both positive and negative implications. On one hand, the reduced revenue allocation to token burns may result in smaller burns compared to the previous strategy, especially considering the cyclical nature of memecoin launchpad volume.
On the other hand, the ongoing burns, coupled with the significant reduction in circulating supply, could create a bullish scenario for PUMP, particularly if demand remains steady. Following the announcement, PUMP experienced a 6.9% increase in value over 24 hours, with the platform generating substantial cash flows, as evidenced by its annualized fees of $802 million and revenue of $416 million, according to DefiLlama data.