Pump.fun, a Solana-based token issuance platform, 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, 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 divide its net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - equally between two purposes. Half of the revenue will be allocated to an irreversible smart contract that automatically buys PUMP tokens on the open market and burns them over the next year.
The remaining 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, which it had acquired through buybacks over the past nine months, in two transactions on the Solana blockchain. The burn process involves the permanent removal of tokens from circulation, typically by sending them to a wallet address that is not controlled by anyone.
This significant reduction in supply is one of the largest single-event supply reductions in crypto history, in terms of the proportion of circulating tokens. According to Alon Cohen, co-founder of Pump.fun, the decision to change the revenue allocation strategy was necessary to ensure the long-term viability of the platform. Cohen emphasized that the company needs to retain half of its revenue to invest in product development, hiring, marketing, and potential acquisitions to secure Pump.fun's future for decades to come. One of the factors that necessitated this change is the price performance of PUMP, which has been trading sideways below its launch valuation for most of 2026, despite the company's use of 100% of its revenue for token buybacks over the past nine months and generating over $1 billion in lifetime revenue.
The new strategy marks a turning point for Pump.fun and its token, $PUMP. Over the past nine months, no other crypto platform has allocated 100% of its revenue to buybacks at this scale. However, the bear case for this strategy is that memecoin launchpad volume is cyclical and mean-reverting. According to data from DefiLlama, Pump.fun's gross protocol revenue totaled $971.37 million in 2025 but is annualizing to roughly $320 million so far in 2026.
This decline in revenue means that the 50% allocated to burns will result in smaller burns compared to the 100% of peak revenue. On the other hand, the bull case is based on the mathematics of the remaining tokens. Burning 36% of the circulating PUMP supply removes a significant block of tokens that could have been sold on the market. By locking 50% of future revenue into burns, more tokens will be permanently destroyed every week, regardless of the company's future decisions.
If Pump.fun continues to generate even half of the revenue it did in 2025, the ongoing burns could retire a substantial portion of the remaining tokens over the next 12 months. This reduction in supply, combined with steady demand, could create a bullish setup for the token that it may not have seen since its launch.
Following the announcement, PUMP's price rose by 6.9% within 24 hours. According to DefiLlama, Pump.fun's annualized fees stand at $802 million, and its revenue is at $416 million, placing it in the category of crypto projects that generate significant cash flows at scale.