Solana memecoin launchpad Pump.fun introduced a trader cashback reward model on Tuesday Feb. 18. Following analysis of user behavior, the platform discovered that most users lost money from trading.
Thus, the model will redirect trading fees into the hands of active traders. Thus, encouraging both retention and liquidity since revenue has fallen dramatically over the last year.
Prior to the launch of a new token project, creators must elect whether to use the standard creator fee of 0.3% or to opt-into the new cashback coins model. Once chosen, there is no option to change the selected model.
As such, the new model represents a shift towards activity-based incentive structures. This rewards user interaction based on trading participation (volume) versus user token deployment.
The Pump.fun Cashback Coins Model
Under the new cashback coins model, Pump.fun will generate cashback coins for each trade executed on the platform using the built-in Terminal trading interface.
As such, the cashback coins will be rewarded solely on the amount of trades executed and the engagement generated (i.e., volume) as opposed to the number of tokens created. According to Pump.fun, not all tokens “deserve” to have a creator fee. Many successful memecoins were launched without an active developer team.
However, prior to the introduction of the cashback coins model, deployers of these tokens would receive a disproportionately large share of the value generated by the token.
By implementing a cashback system, the platform is empowering the market to decide which tokens are worthy of attracting user activity and, therefore, rewards.
The cashback coins model will also introduce a competitive element among tokens. Users can be incentivized to select projects that provide a cashback bonus, potentially leading to increased liquidity being concentrated in those projects.
Meanwhile, some community members have expressed concerns that the cashback model will result in a reduction in guaranteed income for developers. Additionally, the cashback model may lower the incentives for developers to support tokens that have already been migrated to external exchanges.
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Revenue Decline Forces Shift
DeFiLlama data shows the fees generated by Pump.fun declined by 78% from $148.1 Million in January 2025 (the highest generating month) to $31.8 Million in January 2026.
Additionally, the revenue generated in February 2026 is trending lower than January 2026, indicating a continued decline in memecoin-related activities.
Source: DeFiLlama
Data provided by Dune Analytics demonstrates that traders may need more incentives. The data indicates that only 4.76 million of 58.7 million wallets generated between $1,000 and $10,000.
Approximately 14,000 wallets have generated greater than $1,000,000. Further supporting the call for trader focused incentives is the fact that the majority of wallets have recorded losses.
Memecoin Sentiment Indicates Capitulation
According to Santiment, historically, when the memecoins are at a point where they’re experiencing capitulation, there is a speculative rebound. The current market conditions indicate memecoins are in a state of capitulation.
In addition, this move happens as other companies, like Coinbase, have discontinued their Base Creator Rewards Program after paying roughly $45,000 to nearly 17,000 creators. This action aligns with the growing industry trend to focus on activity-based incentives as opposed to the traditional token-based ones.
Why This Matters
The adoption of an activity-based incentive model will likely impact memecoin liquidity on Solana by basing rewards on trading volume versus token deployment, influencing launches and retail participation.
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