Solayer (LAYER) Spotlighted Following Steep Price Correction That Wiped Out Nearly Half Its Market Value

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.

Solayer (LAYER) price slid further on May 6 as the Solana project faced increased scrutiny following a steep price correction that saw its token lose nearly half its market value in under 48 hours.

As the broader crypto market showed signs of recovery from the recent downturn, LAYER token fell over 47% in 24 hours. At the time of writing, it was trading at $1.8.

Solayer is a Solana-based restaking project that claims to push the boundaries of Layer-1 scalability with its hardware-accelerated blockchain framework. It is powered by the novel InfiniSVM execution layer, an architecture designed to scale the Solana Virtual Machine (SVM) using technologies like RDMA and InfiniBand.

According to the project's website, its system is capable of achieving over 1 million transactions per second and over 100 Gbps throughput with minimal latency.

LAYER is the project's native governance token, used by holders to vote on network upgrades, ecosystem grants, and treasury control. The project's token distribution data, however, shows that only 21% of the 1 billion maximum supply was in circulation as of May 3, with 79% still locked.

A scheduled unlock on May 11 will see 129 million tokens—12.9% of the total supply—released into the market, increasing the circulating supply by over 61%. The pending dilution and reports of large holders engaging in coordinated market activity have fueled fears that the recent crash was not accidental but engineered.

Solayer's token has been battered in recent times, with its price falling from an all-time high of $3.41 on May 5, to a low of $1.8 on May 6. At the time of writing, the token was trading at $1.74.

The token's 46% decline since Monday saw a major supply holder execute a move during the Asia trading session, according to one trader's X post. The report claims that the holder used perpetual futures to build a leveraged short position, while also dumping spot holdings as retail strength held.

At the time, the funding rate on Binance Futures was -2.3067%, which showcases the increased pressure on the short side.

A Classic Exit Scam?

The trader's analysis, which was shared with CoinChapter, suggests that the actions fit the bill of an exit scam. With only 210 million tokens in circulation and a further 129 million set to unlock on May 11, insiders who have large locked allocations had both the motive and the opportunity to pull off such a move.

As Solayer's token hit its all-time high, the actor began dumping their spot holdings at elevated prices and positioned themselves to profit as the Solana project's token slid.

The report adds that the simultaneous rise in open interest and collapse in spot cumulative delta supports this theory further. The lack of transparent vesting data adds to the concerns. While standard tokenomics see 20-30% allocated to early investors and 15-20% to the team, Solayer has yet to release any such breakdowns.

This opacity leaves room for manipulation. If insiders control a majority of the locked tokens, as the current structure suggests, they have the ability to time their market exits around unlock schedules.

The structure will see retail investors absorb the downside while insiders capitalize on the volatility. But, unless the team immediately addresses these claims with complete transparency and structural reform, the project risks losing investor confidence.