Pump.fun, a Solana-based platform for token issuance, 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, this approach is being revised following a review that indicated it wasn't yielding the desired outcomes.
The company has announced a shift to a 50/50 revenue split. Half of the net revenue from its core products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be allocated to an irreversible smart contract designed to automatically buy PUMP on the open market and burn it over the next year. The remaining half will be retained by the company to fund product development, hiring, marketing efforts, and potential acquisitions. This new strategy replaces the previous policy where 100% of revenue was dedicated to token buybacks.
Over the past nine months, Pump.fun has burned all the PUMP tokens it purchased from the open market, equivalent to approximately 36% of the token's circulating supply, in two transactions on Solana. This burn process involves the permanent removal of tokens from circulation, typically by sending them to a wallet address that is not controlled by anyone. The announcement of this burn is notable as one of the largest single-event supply reductions in crypto history in terms of the share of circulating tokens affected. Co-founder Alon Cohen elaborated on this strategic change in a follow-up post, emphasizing the need for the company to utilize half of its revenue for investments in products, hiring, marketing, and potential acquisitions to ensure the long-term viability of Pump.fun.
A significant factor prompting this change is the price performance of PUMP, which has largely traded sideways below its launch valuation in 2026, despite the company's use of 100% of its revenue for token buybacks over nine months and achieving over $1 billion in lifetime revenue. The decision marks a turning point for both $PUMP and Pump.fun, with the co-founder seeking to provide context on the broader strategy and future direction. Over the past nine months, no other crypto platform has allocated 100% of its revenue to buybacks at the scale of Pump.fun. However, the platform's gross protocol revenue, which totaled $971.37 million in 2025, is annualizing to roughly $320 million in 2026, according to DefiLlama data, indicating a cyclical and mean-reverting nature of memecoin launchpad volume.
The bear case for this strategy is that the 50% of declining revenue will result in smaller token burns compared to the 100% of peak revenue. On the other hand, the bull case focuses on the mathematics of the remaining tokens. The removal of 36% of the circulating PUMP supply eliminates a significant block of tokens that could have otherwise entered the market.
By locking 50% of future revenue into burns, more tokens will be permanently destroyed every week, regardless of future decisions. If Pump.fun continues to generate revenue at even half the level of 2025, the ongoing burns could retire a substantial portion of the remaining tokens 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 experienced a 6.9% increase over 24 hours. With annualized fees of $802 million and revenue of $416 million, as per DefiLlama, Pump.fun stands out as one of the rare crypto projects generating significant cash flows at scale.