PumpSwap's New Fee Model Allocates 50% of Trading Fees to Token Creators

PumpSwap, a decentralized exchange developed by the Solana-based meme coin launchpad Pump.Fun, has implemented a new revenue-sharing model. This model allocates 50% of trading fees to token creators. Under this new system, token creators will receive 0.05% of each transaction in Solana (SOL) for eligible tokens. This change effectively raises the total fee per transaction to 0.3%, with 0.2% going to liquidity providers and 0.05% to the protocol.

PumpSwap generates revenue through a 0.25% fee on every trade, which is split between liquidity providers (0.2%) and the protocol (0.05%). The updated documentation indicates that an additional 0.05% is directed to a dedicated “coin creator vault.” This new structure has sparked criticism from traders and users, who argue that it rewards bad actors who launch tokens only to abandon them, a practice commonly referred to as “rug pulls.”

Critics on social platform X have expressed concerns that the new fee structure could disincentivize community-driven projects. These projects often rely on active members to maintain or revive abandoned tokens. The revenue share could potentially reward inactive or malicious developers, which could harm the platform's long-term credibility and community trust. Pseudonymous trader 0xRiver commented, “This is a horrible move. 99% of coins are legit CTO [community takeover] coins. People don’t want the dev, and now we are giving the dev money that he rugged. This is super bad.”

Pump.Fun was launched in January 2024 by Noah Tweedale, Alon Cohen, and Dylan Kerler. The platform aims to simplify token creation on Solana, allowing users to launch a token with a custom ticker and image for a small fee. The platform uses a bonding curve model, where token prices rise with demand, and tokens “graduate” to external decentralized exchanges (DEXs) once they surpass a certain market cap. To streamline this graduation process, PumpSwap was introduced in March, enabling instant token migrations and removing the previous 6 SOL fee. It also provides native liquidity pools, reducing reliance on external DEXs.

In April, Pump.Fun reintroduced its live-streaming feature to a limited group of users, five months after suspending it due to a wave of harmful and controversial content. The feature was initially pulled in November 2023 after users began pushing the boundaries with disturbing content aimed at promoting their meme coins. Reports included threats of self-harm or violence if tokens failed to hit specific price targets. Industry voices warned that without effective moderation, the platform risked being shut down if mainstream scrutiny increased. The live-streaming feature is now available to just 5% of users and includes “industry standard moderation systems” and clearly defined content guidelines.