The Solana-based token launchpad, Pump.fun, has been operating under a unique model where all revenue generated was used to buy back and burn its native token, PUMP. This approach, in theory, aimed to support the token's price by continuously reducing its supply. However, after a thorough review, the company has decided to pivot from this strategy.
In a recent announcement, Pump.fun revealed that it would adopt a new revenue allocation model, where half of its net revenue from key products - the Pump.fun bonding curve, PumpSwap, and Terminal - will be dedicated to buying back PUMP tokens on the open market and subsequently burning them. The other half will be retained by the company to invest in product development, hiring, marketing initiatives, and potential strategic acquisitions.
This significant shift comes after the company burned approximately 36% of PUMP's circulating supply over the past nine months, a move considered one of the largest single-event supply reductions in the history of cryptocurrency. According to Alon Cohen, co-founder of Pump.fun, the decision to change the revenue allocation strategy is crucial for the company's long-term sustainability and growth. Despite generating over $1 billion in lifetime revenue and dedicating 100% of it to token buybacks for nine months, PUMP's price has largely traded sideways below its initial valuation in 2026.
The new strategy aims to strike a balance between supporting the token's value and ensuring the company has the necessary funds to evolve and thrive. The price of PUMP saw a 6.9% increase in the 24 hours following the announcement, with the project's annualized fees and revenue standing at $802 million and $416 million, respectively, as per DefiLlama data.