NOIDA (CoinChapter.com) — Solayer, a Solana-based restaking project, has been spotlighted following a steep price correction that wiped out nearly half its market value in under 48 hours. On May 5, 2025, LAYER painted an all-time high near $3.41, with a market capitalization of $636.5 million. By May 6, it had plunged over 47% to $1.8.
The sudden drop has rattled retail participants and triggered renewed scrutiny of the project’s tokenomics and insider activity. Solayer claims to push the boundaries of Layer-1 scalability through a hardware-accelerated blockchain framework.
At its core lies the InfiniSVM execution layer, an architecture designed to scale the Solana Virtual Machine (SVM) using technologies like RDMA and InfiniBand. The team markets its system as capable of exceeding 1 million transactions per second and over 100 Gbps throughput with near-zero latency.
LAYER functions as the project’s native governance token, giving holders the power to vote on network upgrades, ecosystem grants, and treasury control. However, token distribution data raises red flags. As of May 3, only 21% of the 1 billion maximum supply was in circulation, with 79% still locked.
A scheduled unlock on May 11 will release 129 million tokens—12.9% of the total supply—into the market, increasing the circulating supply by over 61%. The pending dilution and mounting accusations of coordinated market manipulation by large holders have fueled fears that the recent crash may not have been accidental but engineered.
Price Crash Sparks Exit Scam Allegations
Solayer’s recent collapse is not merely a case of market correction. Mounting evidence suggests that large holders may have orchestrated a calculated dump of LAYER ahead of the May 11 unlock. The token’s 46% decline from $3.41 to $1.8 since May 5 coincided with aggressive short positioning and a sudden decline in spot market activity.
According to a trader’s X post, a major supply holder executed this move during the Asia trading session, using perpetual futures to build a leveraged short position while offloading spot holdings into retail strength. The reported funding rate of -2.3067% on Binance Futures confirms heightened short-side pressure.
These actions resemble a classic exit scam. With only 210 million tokens in circulation and a further 129 million set to unlock, insiders controlling large locked allocations had motive and opportunity. As LAYER’s price peaked, the alleged actor dumped spot holdings at elevated prices and positioned themselves to profit as the Solana project’s token collapsed.
The simultaneous rise in open interest and collapse in spot cumulative delta strongly supports this theory. The absence of transparent vesting data compounds the concerns. While standard tokenomics imply 20-30% allocation to early investors and 15-20% to the team, Solayer has yet to release detailed disclosures.
This opacity leaves room for manipulation. If insiders control a majority of locked tokens, as the current evidence suggests, they possess the ability to time market exits around unlock schedules. The result is predictable: retail investors absorb the downside, while insiders capitalize on volatility. Unless the team immediately addresses the allegations with transparency and structural reform, the project risks losing investor confidence entirely.
LAYER Price Faces Structural Breakdown Amid Dilution Overhang
LAYER’s recent collapse below $1.70 confirms a decisive technical breakdown, exacerbated by aggressive shorting and the upcoming token unlock. The Solana-based project’s token crashed through the 0.5 Fibonacci retracement level near $1.66.
The breach exposes the next support to be near $1.45, corresponding with the 0.382 Fib level. If that fails, the downside could extend toward $1.18, which aligns with the 0.236 Fib support and matches the base structure formed in late March. Below that, the final support rests near $0.76.
On the upside, LAYER faces immediate resistance near $1.88. Flipping the immediate resistance would target the resistance near $2.18. Both levels now serve as ceilings following the breakdown and are unlikely to flip unless there is strong buyer reversal volume, which is currently absent.
The RSI has dropped to 37, increasing bearish momentum without reaching full oversold exhaustion. The steep divergence from moving averages and the sharp pierce through the 50-day EMA at $2 suggest a panic-led selloff, not a technical retest. The sharp price rejection near $3.12—coinciding with the 1.414 Fib extension—marks the top of the alleged exit scam timeline for the Solana-based token.
The chart aligns with the narrative of insiders exiting into strength. It confirms that retail is now left to absorb the fallout with little structural support above $1.45. Until the unlock overhang clears, the path of least resistance remains down.
