Up until now, Pump.fun, a Solana-based platform for token issuance, has operated under a straightforward model where every dollar earned was used to buy back 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 strategy over the past nine months, the company has decided to adopt a new approach. In a recent announcement, Pump.fun revealed that it would transition to a 50/50 revenue split. Under this new model, half of the net revenue generated from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - 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.
The remaining half will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions. This shift marks a significant departure from the previous policy, where 100% of revenue was dedicated to token buybacks. Over the past nine months, Pump.fun has burned approximately 36% of PUMP's circulating supply, which it had purchased from the open market, in two transactions on the Solana network.
This burn process involves the permanent removal of tokens from circulation, typically by sending them to an inaccessible crypto wallet. The scale of this burn is notable, representing one of the largest single-event supply reductions in cryptocurrency history in terms of the percentage of circulating tokens.
Co-founder Alon Cohen elaborated on this strategic change, emphasizing the need for the company to retain half of its revenue to ensure investments in product development, talent acquisition, marketing, and strategic acquisitions, thereby securing Pump.fun's long-term viability. A key factor prompting this change is the performance of PUMP's price chart. Despite dedicating 100% of its revenue to token buybacks over nine months and generating over $1 billion in lifetime revenue, PUMP has primarily traded sideways below its initial valuation throughout 2026.
Cohen provided additional context, highlighting that no other crypto platform has undertaken buybacks at this scale and emphasizing the company's vision for its future. However, there are both bullish and bearish perspectives on this development. On the bearish side, the volume of memecoin launchpads like Pump.fun is subject to cycles and mean reversion. Data from DefiLlama indicates that while Pump.fun's gross protocol revenue was $971.37 million in 2025, it is currently annualizing to approximately $320 million in 2026.
This decline in revenue means that the 50% allocated to burns will result in smaller token burns compared to the 100% of peak revenue dedicated to this purpose in the past. On the bullish side, the mathematics of the remaining tokens in circulation is promising. The removal of 36% of PUMP's circulating supply through burning reduces the potential selling pressure on the market.
Furthermore, by locking 50% of future revenue into burns, more tokens will be permanently destroyed every week, regardless of future decisions. If Pump.fun can maintain even half of its 2025 revenue levels, the ongoing burns could significantly reduce the remaining token supply over the next 12 months. This reduction in supply, coupled with steady demand, could create a bullish scenario for the token that it may not have seen since its launch.
Following the announcement, PUMP saw a 6.9% increase in value over 24 hours. According to DefiLlama, Pump.fun's annualized fees stand at $802 million, with revenue at $416 million, placing it among the rare crypto projects that generate substantial cash flows at scale.