Pump.fun co-founder announced a system update saying the payment model failed
Crypto journalist
Anas Hasan
Crypto journalist
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Pump.fun co-founder Alon admitted that the platform's creator payment method was not sustainable, leading to a major system change that allowed traders to decide which tokens deserved revenue sharing arrangements.
The Solana-based memecoin startup is trying to balance creator incentives with merchant engagement as it faces heightened regulatory pressures and erosion of market share.
Although some trading activity has increased in recent days, it is nowhere near what it used to be.
The platform introduced the first changes with a payment sharing feature that allows creators to distribute earnings, transfer ownership of coins and revoke update authority for up to 10 wallets.
The update aims to address transparency issues that previously forced token holders to trust issuers to transfer payments to intended recipients.
Flexible payments have brought creative but disappointing business
Alon's Dynamic Payments V1, which launched months ago, initially proved successful, attracting developers who had never used crypto apps.
“After only a week, the potential of the strategy showed: an increasing number of creators – many of whom had never touched a Clip app before – started launching and releasing coins on the platform,” he wrote.
The stream meta platform activity that followed doubled, with engagement curve volumes rising by 2x within weeks of the fee structure being implemented.
But the model created an unbalanced ecosystem by encouraging the creation of low-risk coins over high-risk trading.
“Traders are the lifeblood of the platform,” Alon wrote, adding that successful tokens require market participants to provide liquidity, generate volume, and take risks.
“Creator fees may have distorted the incentive for users to engage in a low-risk activity (coin creation) over a risky activity (trading),” he added.
Alon acknowledged that creator fees are “a good tool for incentivizing high-quality project tokens,” but said the platform “fails to provide a good user experience” for narratives that could use fees to raise project ceilings.
The new system will “implement a market-based approach, and marketers will decide whether a narrative is truly worthy of a creator's fee and how it should be used.”
“I'm extremely excited about what 2026 holds,” he says optimistically.
The announcement has drawn sharp criticism from industry observers who question whether the changes address fundamental problems.
Unihax0r, a blockchain developer, dismissed the update as gaslighting: “All this to convey the message: It's okay. The canals need their hyperliquid moment. We need a public good launch pad where 99% of the value is redistributed to users.”
He criticized Pump.fun for rebranding the tax as creator's fees, saying, “People who engage are not ‘creators'. They don't create anything of value, if anything it should be called extractive payments.”
Unihax0r explained that they use industry-leading tools that launch thousands of tokens in 2 clicks while raising more revenue, and asked why the platform is “highly focused” when they have to deploy 10k per day.
A user named X named “Patient” proposed a simple solution: “Creator pays 0% until a coin reaches 1m+mc, 3 to 5 SOL to deploy a coin = problem solved.”
Meanwhile, “Easy” has unfairly compared the changes to K9's strategy to the wallet app, saying the fee reassignment feature encourages recruiters to pay unwitting recipients, creating a lobbying campaign that says “a bunch of wallet holders have worried the living hell out of that person.”
Growing legal problems and treasury controversy
With all this uncertainty brewing on the platform, in December a US federal judge allowed plaintiffs to add nearly 5,000 internal chat messages to pump.fun, Gito Labs and Solana Foundation entities, alleging they were operating a coordinated enterprise.
Judge Colin McMahon allowed the complaint to be amended in September after the whistleblower's testimony.
The indictment alleges that the defendants engaged in practices that could have resulted in high prices by secretly enabling fraudulent trading orders.
Court filings estimate the platform has generated more than $722 million in revenue and is costing retailers between $4 billion and $5.5 billion in losses.
Separately, co-founder Sapijiju denied allegations of a $436 million withdrawal of US dollars, calling the claims “complete misinformation” and describing the transfers as routine treasury management.
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