Pump.fun, a Solana-based token issuance platform, has been operating under a unique model where every dollar of revenue was used to buy and burn its native token, PUMP. The goal was to reduce the token's supply and boost its price. However, after a nine-month review, the company has decided to change its strategy. Going forward, Pump.fun will split its revenue in half, with 50% allocated to buying and burning PUMP tokens, and the other 50% dedicated to operational costs, product development, hiring, marketing, and potential acquisitions.
This new approach replaces the previous policy of allocating 100% of revenue to token buybacks. Over the past nine months, Pump.fun has burned approximately 36% of PUMP's circulating supply, which is one of the largest single-event supply reductions in crypto history.
The company's co-founder, Alon Cohen, explained that the change is necessary to ensure the long-term sustainability of the platform. Despite generating over $1 billion in lifetime revenue, PUMP's price has been trading sideways below its launch valuation.
The new strategy aims to balance token burns with operational needs, allowing Pump.fun to invest in its growth and development. The price of PUMP rose 6.9% in the 24 hours following the announcement, with the token's annualized fees and revenue standing at $802 million and $416 million, respectively, according to DefiLlama.