How Layer Works
A complete breakdown of every mechanism in the protocol, from token launch to holder distributions, tier-based selling, loyalty multipliers, and automatic liquidity.
Overview
Layer is a distribution layer built on top of pump.fun. Tokens are created on pump.fun's bonding curve. Same liquidity, same chart, same ecosystem. But the dev wallet is controlled by the protocol, not the creator.
Every buy triggers a small counter-sell from the dev wallet. The SOL received is split and distributed to holders automatically. The more you hold, and the longer you hold, the bigger your share.
Key Numbers
Token Launch
Launching a token on Layer is a two-step process. The creator never holds private keys to the dev wallet. The protocol controls it from the start.
Step 1: Prepare
The creator fills in token details (name, symbol, image, socials) and chooses a dev buy percentage (50–78% of total supply). The backend generates a fresh dev wallet, LP wallet, and mint keypair. A transaction is returned for the creator to sign. This transfers SOL from their wallet to the newly created dev wallet.
Step 2: Confirm
After the creator signs and the SOL arrives, the backend creates the token on pump.fun's bonding curve using the dev wallet as the creator. The dev wallet performs the initial buy, acquiring the configured percentage of supply. The token is now live.
Launch Costs
Total = Dev Buy Cost + 0.045 SOL in fixed fees. No recurring fees.
Counter-Sell Tax
The counter-sell is the core mechanism that generates SOL for distributions. It is not a transfer tax on the token itself — it is an automatic sell from the protocol's dev wallet triggered by incoming buys.
How It Works
- 1.A user buys the token on pump.fun (or PumpSwap after graduation).
- 2.If the buy is worth $1 or more, the protocol triggers a counter-sell of 7.77% of the buy amount from the dev wallet.
- 3.The SOL received is added to the token's accumulated balance, which feeds the distribution system.
- 4.The sell is capped by the current tier's remaining allocation — the protocol can never dump beyond what the tier allows.
Buys below $1 USD are ignored. The counter-sell uses Jito bundles for MEV protection when the sell amount exceeds 0.05 SOL.
Tier System
The tier system controls how much the protocol can sell at each market cap level. As the token's market cap grows, new tiers unlock and additional supply becomes sellable. This prevents the dev wallet from dumping the entire allocation at low market caps.
| Tier | Market Cap | Allocation | Cumulative |
|---|---|---|---|
| T1 | $50K – $250K | 5% | 5% |
| T2 | $250K – $500K | 5% | 10% |
| T3 | $500K – $1M | 10% | 20% |
| T4 | $1M – $2.5M | 10% | 30% |
| T5 | $2.5M – $5M | 10% | 40% |
| T6 | $5M – $10M | 10% | 50% |
| T7 | $10M – $25M | 20% | 70% |
| T8 | $25M – $100M | 30% | 100% |
Allocations are a percentage of the dev wallet's holdings. For example, with a 50% dev buy (500M tokens), Tier 1 unlocks 5% of 500M = 25M tokens for sale. The remaining 95% stays locked until higher tiers are reached.
Selling Pause Rule
If the market cap drops more than 1 tier below the all-time high tier, selling is paused entirely. This prevents the protocol from selling into a declining market. Selling resumes when the price recovers to within 1 tier of the ATH.
Example: ATH at Tier 5, price drops to Tier 3 (2 tier gap) → selling paused. Resumes at Tier 4+.
Distribution
SOL accumulated from counter-sells is distributed to holders automatically. The system runs on two cycles: snapshots (to track who holds what) and distributions (to send SOL).
Snapshots
Every 15 minutes, the system captures all holder balances from the blockchain. Streaks are updated based on whether a holder kept or reduced their position since the last snapshot.
Distributions
Every 5 minutes, 6.2% of the accumulated SOL is taken and distributed. The remaining 93.8% stays in the pool for future cycles — the drip never runs dry.
Distribution Split
How Your Share Is Calculated
Each holder's share of the 75% holder pool is proportional to their score:
Your payout = (your_score / total_scores) x holder_pool. A holder with 1% of supply and a 4x multiplier earns the same as a holder with 4% of supply and a 1x multiplier.
Loyalty Multiplier
The loyalty system rewards holders who stay. Every 15-minute snapshot you hold through increases your streak, and your streak determines your multiplier on distributions.
Formula
multiplier = min(7.77, 1 + streak x 0.0705)
+7.05% per snapshot held · max multiplier in 24 hours
| Streak | Time Held | Multiplier |
|---|---|---|
| 0 | Just bought | 1.00x |
| 4 | 1 hour | 1.28x |
| 16 | 4 hours | 2.13x |
| 48 | 12 hours | 4.39x |
| 96 | 24 hours | 7.77x (MAX) |
Sell Penalties
Selling doesn't reset your streak to zero unless you dump more than half your bag. Partial sells get graduated penalties:
This rewards partial profit-taking without destroying your entire loyalty bonus. Take 10% off the table and you only lose 25% of your streak.
Liquidity Pool
20% of every distribution cycle is routed to a dedicated LP wallet. When the accumulated SOL in the LP wallet reaches the threshold, liquidity is automatically added to the token's PumpSwap pool.
LP additions only happen for graduated tokens (those that migrated from the bonding curve to PumpSwap). While a token is still on the bonding curve, the LP wallet accumulates SOL but does not add liquidity.
The LP wallet is protocol-controlled — the creator has no access to it. All LP additions are recorded on-chain and visible in the token dashboard.
Graduation
When a token's bonding curve completes on pump.fun, it graduates and migrates to a real DEX (Raydium/PumpSwap). This is an automatic process handled by pump.fun's protocol.
What Changes After Graduation
Counter-sells continue — they switch from bonding-curve sells to PumpSwap swaps.
Distributions continue with the same 75/20/5 split.
LP additions become active — accumulated SOL can now be added to the PumpSwap pool.
Tier restrictions still apply — the protocol respects the same allocation limits.
Token status is tracked as ACTIVE (bonding curve) or GRADUATED (on PumpSwap). Both states receive full distribution and counter-sell functionality.
Safety Mechanics
Layer has several built-in protections to prevent abuse and protect holders:
Protocol-Controlled Dev Wallet
The creator never has access to the dev wallet private key. It is generated, encrypted, and managed entirely by the protocol. The creator cannot rug — the protocol controls all selling.
Tier-Capped Selling
The protocol can only sell what the current tier allows. Even if the entire accumulated balance could be sold, it is capped by the tier's remaining allocation. Once a tier's allocation is exhausted, no more tokens are sold until the next tier unlocks.
Selling Pause on Drops
If the price drops more than 1 tier below the all-time high tier, all selling pauses. This prevents the protocol from accelerating a decline. Selling only resumes when the price recovers.
Creator Reimbursement Priority
The creator's initial SOL deposit is repaid first from distributions, before the 75/20/5 split kicks in. This aligns the creator's incentive with the token's success — they get their money back only if the token generates volume.
Distribution Lock
Each distribution cycle acquires a database lock to prevent overlapping cycles. Failed payments are automatically retried in subsequent cycles — no SOL is lost.
Glossary
Same infrastructure. Opposite outcome.