Pump.fun Acknowledges Creator Fee Mechanism "Incentive Distortion," Plans Comprehensive Adjustment

On January 10, Pump.fun announced it will restructure its creator fee mechanism. Co-creator Alon Cohen noted in a post on X that the existing Dynamic Fees V1—while boosting platform activity significantly short-term—may have “distorted incentive structures” long-term, failing to foster sustainable market behavior. Cohen pointed out the mechanism rewards low-risk, large-scale token issuance but suppresses high-risk trading activity critical to the platform. “Traders are the core of the platform’s liquidity and trading volume—this structure is dangerous,” he added. Looking back, Cohen noted the mechanism’s initial impact was significant: a flood of new creators boosted engagement via live streams and other tactics. Pump.fun’s bonding curve trading volume doubled in weeks, forming one of the most vibrant on-chain ecosystems since early 2025. But the hype faded quickly, exposing structural flaws. For its initial adjustment, Pump.fun will roll out a creator fee splitting tool: creators or Community Take Over (CTO) admins can proportionally distribute fees to up to 10 wallets after a token launches. It also supports transferring token ownership and revoking update permissions. Cohen stressed Pump.fun team members will never take any creator fees, under any circumstances. “This feature is entirely for frontline players,” he said—fees can be claimed at any time with no expiration.