Pump.fun continues its aggressive strategy of native token buybacks, dedicating the majority of its fees to decreasing the supply of its PUMP token. To date, the team has invested over $205 million into these buybacks, representing more than 99% of its daily fees. This initiative has resulted in the repurchase of 13.86% of the total PUMP supply, contributing to the token's recovery from its recent lows.
This approach by Pump.fun stands in contrast to most other Solana projects, which typically retain their fees. Pump.fun's commitment to buybacks was announced following periods where it faced criticism for extracting fees outside the Solana ecosystem. Estimates suggest Pump.fun has generated approximately $1 billion in fees since its inception, with a significant portion stemming from the peak altcoin season of the past year.
Impact of PUMP Buybacks on Token Value
Despite consistent buyback efforts, PUMP tokens have largely remained near their lower price ranges. While the buybacks effectively absorb fees generated from meme token creation and trading, some community members express skepticism about whether the value truly returns to the community.
Currently, PUMP is trading around $0.0027, marking a 54.7% decrease over the last three months. Pump.fun's daily fee generation has also seen a slight reduction, limiting the volume of PUMP it can purchase to significantly influence market prices. Criticisms have emerged within the community regarding Pump.fun's management of its SOL reserves, with allegations that these reserves were sold for PUMP instead of being staked. Even with the ongoing buybacks, many PUMP holders remain at a loss and have not seen any additional benefits or profit-sharing from these initiatives.
Open interest for PUMP is also at a near all-time low of $183 million, with approximately 60% of positions being long. On Hyperliquid, about 51% of traders are positioned long, indicating a continued sentiment towards betting on another price drop for PUMP. The token has experienced significant price drops that have liquidated long positions, and it has not undergone a short squeeze. Currently, only 10 Hyperliquid whales hold positions in the token.
PUMP Reflects Slowing Meme Token Market Activity
Pump.fun has transitioned towards decentralized trading as its daily fees from new token generation have declined. While the decentralized exchange (DEX) has worked to compensate for this reduction, it has not yet matched the peak revenues seen during the meme coin season.
Pump.fun and its PumpSwap DEX continue to generate around $2.7 million in daily fees, positioning them among the top five fee-producing applications. These daily fees maintain a high baseline, even though Pump.fun has moderated its token production and graduation rates.
Trading activity for meme tokens on Solana has also shifted, now accounting for only 5% of overall trading volumes. DEX platforms have redirected their focus towards trading wrapped assets, stablecoins, and established meme tokens. Newly launched and older meme tokens collectively represent about 5% of Solana DEX volumes, a substantial decrease from over 80% during peak periods.