Pump.fun fee mechanism undergoes major adjustments: from creator incentives to trader dominance

Pump.fun co-founder Alon Cohen recently announced a major reform of the creator fee mechanism. The existing dynamic fee system, while successfully incentivizing many creators to issue tokens on the platform, has exposed a misaligned incentive problem—overly encouraging low-risk token issuance behaviors, which in turn weakens high-risk, high-value trading activities. The new approach is to adopt a market-based method, allowing traders to decide whether a token narrative is worth paying creator fees for, and how to utilize these fees.

Why the existing mechanism needs adjustment

Misaligned incentives

The dynamic fee V1 version launched a few months ago indeed achieved results. Many novice creators began issuing tokens and streaming on Pump.fun, and by 2025, the platform created the “best on-chain environment,” with trading volume doubling. However, the problem with this model is that it incentivizes easy tasks (token issuance) rather than difficult and more valuable activities (trading and taking risks).

Lack of practicality

For ordinary Meme coin deployers, the current fee mechanism has not significantly changed their behavior. Creator fees lack practical application scenarios—for example, they are difficult to effectively use for community building, celebrity collaborations, or other purposes that can enhance the token ecosystem. This has led the fee mechanism to become a formality rather than a tool that truly drives the platform ecosystem.

Questions about sustainability

Alon Cohen explicitly pointed out that this model is “unsustainable.” Over-incentivizing low-risk activities in the long run will weaken the healthy development of the platform and impact token quality and user experience.

The new direction: the significance of market-based decision-making

From platform decisions to market decisions

The core of the reform is a transfer of power. No longer solely decided by the platform, but instead determined by market behavior. This embodies the decentralization philosophy—market participants vote with their feet, deciding which narratives are worth creator fees and how fees should be allocated for maximum effectiveness.

Recalibrating the incentive structure

The new mechanism will adjust the incentive chain so that successful tokens are more likely to appear in environments that incentivize traders to participate, provide liquidity, generate trading volume, and take risks. This means shifting from a “creator-friendly” approach to a “trader-friendly” one, moving from supply-side encouragement to demand-side encouragement.

Market performance of PUMP token

As of now, the PUMP token ranks 71st by market cap, with a price of $0.002275 and a 24-hour increase of 6.83%. The platform’s reform announcement itself has also driven the token price up, reflecting market recognition of the reform direction.

Potential impact on the ecosystem

This reform reflects a deep transformation in the Meme coin ecosystem. In 2025, Pump.fun promoted the prosperity of Solana-based Meme coins, but as the market matures, simple “token issuance incentives” are no longer sufficient to sustain a healthy ecosystem. The new mechanism is expected to:

• Improve token quality and reduce meaningless “air coins”
• Strengthen trader participation and risk-taking willingness
• Make the fee mechanism a genuine part of token economic design, rather than just a source of platform revenue

Summary

Pump.fun’s reform essentially corrects the misaligned incentives. The shift from “encouraging token issuance” to “encouraging trading” may seem simple, but it reflects the platform’s deep thinking about its own ecosystem. The new mechanism entrusts power to market participants, allowing traders to decide the value and use of fees—this is a more mature and sustainable direction. Specific details of the new plan will be announced later, but the direction of change is already clear—Pump.fun is evolving from a “token factory” into a “trading marketplace.”