The Solana-based token launchpad Pump.fun has been operating under a straightforward model, where every dollar of revenue generated was used to buy back and burn its native token, PUMP. The goal behind this strategy was to consistently reduce the token's supply, thereby supporting its price and aligning the token's value with the platform's success.
However, after reviewing the effectiveness of this nine-month policy, Pump.fun has decided to change its approach. The company will now adopt a 50/50 revenue split, where 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. This contract will automatically purchase PUMP tokens on the open market and burn them over the next year. The remaining half of the revenue will be retained by the company to fund product development, hiring, marketing initiatives, and potential acquisitions.
Prior to this change, 100% of the revenue was dedicated 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 cryptocurrency history. This significant burn is the result of two transactions on the Solana blockchain.
The term 'burn' refers to the permanent removal of tokens from circulation, typically achieved by sending them to a cryptocurrency wallet that is not controlled by anyone. Co-founder Alon Cohen explained the rationale behind this strategic shift in a follow-up post, emphasizing the need for the company to allocate revenue towards investment, hiring, marketing, and potential acquisitions to ensure the long-term sustainability of Pump.fun. A key factor contributing to this decision is the price performance of PUMP, which has largely traded sideways below its initial valuation in 2026, despite the company generating over $1 billion in lifetime revenue and dedicating 100% of its revenue to token buybacks for nine months. The new strategy marks a significant turning point for both PUMP and Pump.fun.
While the company has made considerable progress, the bear case suggests that the volume of memecoin launchpads is cyclical and mean-reverting. According to data from DefiLlama, Pump.fun's gross protocol revenue was $971.37 million in 2025 but is annualizing to roughly $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 previously dedicated to buybacks. 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 substantial block of tokens that could have potentially entered the market. By locking 50% of future revenue into burns, more tokens will be permanently destroyed every week, regardless of the team's future decisions. If Pump.fun continues to generate even half of the revenue it did in 2025, the ongoing burns could retire a significant portion of the remaining tokens over the next 12 months. This reduction in supply, coupled with steady demand, could create a bullish setup for the token that it may not have seen since its launch.
Following the announcement, PUMP experienced a 6.9% increase in value over 24 hours. As per DefiLlama, Pump.fun's annualized fees stand at $802 million, and its revenue is at $416 million, placing it among the rare cryptocurrency projects that generate substantial cash flows at scale.