Pump.fun Co-Founder Claims Fee Structure Was Ineffective, Reveals System Overhaul

Pump.fun co-founder Alon recognized that the platform’s creator fee model has not achieved sustainable outcomes, leading to a significant system redesign that will empower traders to determine which tokens merit revenue-sharing agreements.

This acknowledgment comes as the Solana-based memecoin platform grapples with increasing legal challenges and a decline in market share while striving to balance creator incentives with trader engagement.

While there has been a slight uptick in trading activity recently, it remains far from previous levels.

The platform has rolled out its initial modifications through a fee-sharing feature that enables creators to allocate earnings among up to 10 wallets, transfer ownership of coins, and revoke update permissions.

This update seeks to resolve transparency concerns that previously compelled token holders to rely on deployers to manually redirect fees to the appropriate recipients.

Creator fees need reform.
When Dynamic Fees V1 was launched a few months ago, the intention was to foster more success stories within our ecosystem by providing top project founders and teams a robust incentive to launch their token on Pump.fun and drive it to success.
Only a week… https://t.co/yiu9DjsCqR pic.twitter.com/TZHTPAKnfw

— alon (@a1lon9) January 9, 2026

Dynamic Fees Attracted Creators But Discouraged Trading

Alon clarified that Dynamic Fees V1, introduced months prior, initially seemed successful, luring creators who had previously never engaged with crypto applications.

“Just a week later, the potential of the mechanism became apparent: an increasing number of creators—many of whom had never interacted with a crypto app before—began organically launching coins and streaming on the platform,” he stated.

The subsequent streaming trend doubled platform activity, with bonding curve volumes increasing twofold within weeks of the fee structure’s introduction.

Nonetheless, the model fostered an imbalanced ecosystem by encouraging low-risk coin creation over high-risk trading endeavors.

“Traders are the lifeblood of the platform,” Alon mentioned, emphasizing that successful tokens require an environment where market participants provide liquidity, generate volume, and take risks.

He further noted that “creator fees may have distorted the incentive for users to engage in low-risk activities (coin creation) rather than high-risk activities (trading), which is concerning.”

Alon conceded that creator fees “are a valuable tool for incentivizing high-quality Project Tokens” but acknowledged the platform “falls short in delivering a positive user experience” for narratives that could leverage fees to elevate project ceilings.

The new system will adopt “a market-driven approach, allowing traders to determine whether a narrative truly merits Creator Fees, and how they should be utilized.”

He concluded on a hopeful note, expressing that he is “extremely excited for what 2026 has in store.”

Community Criticism of Creator Fee Structure

The announcement faced significant backlash from industry commentators who questioned if the adjustments truly tackled fundamental issues.

Unihax0r, a blockchain developer, dismissed the update as mere gaslighting, stating: “All this message to announce: nothing. The trenches require their Hyperliquid moment. We need a launchpad as a public good, where 99% of the value is redistributed to users.“

He criticized Pump.fun for rebranding taxes as creator fees, contending that “those who deploy are not ‘creators’. They don’t generate anything valuable; it should be termed Extractor fees instead.“

Unihax0r asserted that deployers utilize automated tools to launch thousands of tokens “in 2 clicks,” while reaping substantial profits with minimal effort, questioning why the platform “offers them the greatest advantage” when “they NEED 10k deployments daily.“

All this message to announce: nothing
The trenches need their Hyperliquid moment. We need a launchpad as a public good, where 99% of the value is redistributed to users
We criticized all developers on the previous chain for having 5/5 taxes on meme coins, and we received absolutely… https://t.co/ytHd5nJMOq

— Unihax0r (@0xUnihax0r) January 10, 2026

A user identified as “Patience” suggested a more straightforward solution: “set creator fees to 0% until a coin achieves a market cap of 1 million+, charge about 3 to 5 SOL to deploy a coin = problem solved.”

Meanwhile, “Easy” from K9 Strategy unfavorably compared the changes to the Bags app, arguing that the fee reassignment feature would encourage deployers to allocate fees to unwilling recipients, leading to pressure campaigns where “a group of bag holders relentlessly urges that person” to acknowledge tokens they never intended to launch.

Increasing Legal Issues and Treasury Controversy

Amid the uncertainties surrounding the platform, a U.S. federal judge in December permitted plaintiffs to incorporate nearly 5,000 internal chat messages into a class-action lawsuit alleging that Pump.Fun, Jito Labs, and Solana Foundation entities operated a coordinated enterprise that provided insiders with preferential access to newly launched tokens.

Judge Colleen McMahon granted permission to amend the complaint with evidence from a whistleblower who resurfaced in September.

Over 5,000 internal https://t.co/BB5leCKHRh chats surface, allegedly showing developers and bots coordinating trades and block timing. Lawsuit intensifies!#MEV #PumpFunhttps://t.co/sXWtN893la

— Cryptonews.com (@cryptonews) December 18, 2025

The lawsuit claims that the defendants promoted launches as equitable while secretly facilitating transaction-order manipulation through maximal extractable value practices.

Court documents estimate that the platform generated over $722 million in revenue while causing losses ranging from $4 billion to $5.5 billion for retail traders.

Separately, co-founder Sapijiju rebutted allegations of a $436 million USDC withdrawal, labeling the claims as “complete misinformation” and describing the transfers as standard treasury management.

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