Decrypting XAI: The Layer 3 Gaming Chain Backed by Arbitrum | CryptoSnap - Dr. DODO is Researching

On January 3, 2024, Binance announced its latest Launchpool project - XAI. According to the official introduction, XAI is a "public blockchain developed for large-scale blockchain game adoption". However, gaming-focused blockchains are not a new concept, so what is the background and capability of XAI that allowed it to be listed on Binance Launchpool among many other gaming chains? The last sentence of the project description makes it clear: "Xai is developed by Offchain Labs leveraging Arbitrum technology." XAI is an Arbitrum Orbit L3 public chain directly supported and assisted in development by Offchain Labs, the team behind Arbitrum.

Let's take a look at the unique features of this L3 gaming chain officially backed by Arbitrum!

Technical Foundation

To understand XAI's technical foundation, we first need to be familiar with Arbitrum Orbit L3 public chains. As Dr. DODO introduced in last year’s Megascope, Arbitrum Orbit is essentially an L3 scaling solution based on Arbitrum L2 Rollups, allowing developers to launch chains with one click. XAI is an Orbit L3 chain built on Arbitrum Nitro. Arbitrum Nitro compiles Geth's core directly at the lower level of client software, greatly improving Ethereum compatibility. It also integrates modules like BOLD and Stylus. BOLD enables fraud proof without permission, significantly reducing withdrawal delays. Stylus supports multi-language development, not only improving efficiency but also enabling seamless migration from other chains to Arbitrum.

In short, Nitro provides Xai with a stable, secure and efficient foundation. Seamless interoperability with Arbitrum One and Nova also directly connects Xai to richer ecosystem resources. Compared to building an independent blockchain from scratch, XAI’s leveraging of Arbitrum’s existing infrastructure is more efficient in development.

Tokenomics

Arbitrum Orbit gives L3 chains considerable autonomy in aspects like consensus mechanisms, governance models, gas fee tokens, economic models, etc. As such, XAI is able to design a unique dual-token model similar to GMX’s esToken system, with native token XAI and staked version esXAI forming a deflationary dual-token system. The two are interchangeable, with changing exchange ratios over time. XAI serves as the governance token and gas token to power the network operation. esXAI attracts node operators through staking to provide infrastructure for the ecosystem.

XAI Token Allocation

The total supply of XAI is 2.5 billion. The initial allocation is as follows:

Team and early contributors: 20% unlocked gradually over 42 months
Investors: 22.41% unlocked over 30 months
Ecosystem: 2% for immediate liquidity, 5.5% unlocked over 42 months for ecosystem development
Mining rewards: 50.1% distributed as esXAI, exchangeable to XAI at fluctuating ratios depending on unlocking duration

Source: https://xai-foundation.gitbook.io/xai-network/xai-blockchain/xai-tokenomics

Gaming Ecosystem

For a gaming-focused public chain, the gaming ecosystem is the most important topic. According to the official website, 5 games are currently under development. The first to launch will be Final Form, a card battle game featuring integrated card collection, Roguelite and battle gameplay for an immersive experience. Players can evolve cards, join alliances and earn rewards. It is developed by Ex Populus studio consisting of veteran developers from major gaming companies. Ex Populus is also XAI's partnering game developer, responsible for developing games under the guidance of XAI Foundation. Apart from Ex Populus, XAI has also established strategic partnerships with leading players like Tencent and Animoca Brands, bringing abundant gaming resources and channel support. We can foresee a suite of high-quality titles to emerge in XAI’s ecosystem, building a gaming universe with depth and breadth.

Strategic Positioning

The launch of XAI also signifies the intense competition between Arbitrum and Optimism. Facing Optimism’s aggressive expansion in the OP Stack Layer 2 market, Arbitrum chose to build a vertical Layer 3 gaming chain. This customized approach not only improves performance, but also better caters to gaming users’ needs.

As a strategic move by Arbitrum, XAI injects tremendous growth momentum and is likely to open new expansion space. Compared to direct confrontation with Optimism, Arbitrum’s strategic pivot demonstrates remarkable market insights and calm by the team.