During these events, the LAYER token, the native governance token for the LAYER network, plummeted in value. This rapid decline has resulted in very troubling allegations of an exit scam. The token’s quick drop in value after hitting an all-time high just 3 weeks earlier (46%) sent up alarm bells for investors. The decline happened around the same time as extreme short positioning and a planned token unlock, stoking even more speculation about the project’s fate.

As a governance token, LAYER holders have the ability to vote on network upgrades, grants to be distributed through the ecosystem, and control the treasury. The LAYER Consortium is marketing its blockchain system as capable of handling more than 1 million transactions each second. It has a data throughput of more than 100 Gbps with virtually zero latency. LAYER’s price peaked at $3.41 on May 5, 2025, giving the token a market cap of $636.5 million.

Market Dynamics and Price Decline

LAYER has tanked 46%, from $3.41 on May 5 to today's price of $1.80. This drastic drop can be directly attributed to predatory short selling and a rapid decrease in spot market trading. A pre-determined unlock on May 11 will dump 129 million LAYER tokens—12.9% of the total supply—into circulation. The unlock will boost the circulating supply of LAYER by more than 61%.

As of May 3, only 21% of the total supply of LAYER (1 billion max supply) is in circulation. At the same time, a whopping 79% is still inaccessible. Only 210 million LAYER tokens are in circulation right now. With another 129 million about to unlock, and with many insiders holding large locked allocations, they have motive and opportunity. Many proponents accused the primary trader of orchestrating the LAYER price fall, as it seemed to be a prepared exit.

"These actions resemble a classic exit scam." - CoinChapter.com

Technical Breakdown and Support Levels

LAYER’s recent drop below $1.70 seals the deal on a major technical breakdown largely accelerated by aggressive shorting and the imminent token unlock. The sharp price rejection near $3.12—coinciding with the 1.414 Fib extension—marks the top of the alleged exit scam timeline for LAYER. The breach exposes the next support to be around $1.45, in line with the 0.382 Fib level.

On the bullish side, LAYER will meet resistance quickly at around $1.88. If LAYER fails to retest the short-term resistance, it could retrace again down to $1.18 support level. This area overlaps with the 0.236 Fib support and aligns with the base formation laid out in late March.

Investor Confidence and Project Outlook

If these allegations of an exit scam are proven true, investor confidence in the LAYER project will be completely shattered. The lack of transparency surrounding the token's distribution and the sudden price drop have fueled concerns about the project's legitimacy. Things only get more complicated with the upcoming token unlock, having a substantially larger supply place additional downward pressure on the price.

"Unless the team immediately addresses the allegations with transparency and structural reform, the project risks losing investor confidence entirely." - CoinChapter.com