Xai is a decentralized gaming ecosystem focused on developing and publishing blockchain games and supporting their underlying infrastructure. Designed specifically for gaming, the blockchain aims to provide a simplified wallet and account experience for traditional gamers while providing developers with a convenient gaming blockchain solution. Xai has built a fully decentralized ecosystem dedicated to enabling innovation and development in the gaming industry.

Project Information

Team Strength

The Xai blockchain is initiated by several key entities, each with a different role.

Xai Foundation

The Xai Foundation is committed to promoting the development and innovation of the blockchain gaming ecosystem. The main responsibilities of the Xai Foundation include:

• Develop blockchain network strategy to support blockchain games developed by Ex Populus and ensure the stability and security of the network;
• Responsible for the creation and distribution of XAI tokens, overseeing the governance of tokens and ensuring fair and transparent distribution;
• Focus on community development and governance, cultivate a supportive and inclusive community, and allow the community to participate in network governance to ensure collective participation in important decisions.

Ex Populus

Ex Populus is a laboratory entity based in the United States, focusing on the research, development and innovation of blockchain games. As a well-known game development studio, its team members come from well-known companies such as Pixar, Ubisoft, Activision, and Blizzard. Ex Populus' advantage lies in the fact that its leader Tobias Batton is a top expert in the game industry. As CEO, Tobias Batton has rich experience in digital products and marketing. In the past 20 years, he has founded and successfully exited 3 companies.

• Prior to joining Ex Populus, Batton powered nearly 1 billion app installs for top mobile game publishers through the Signal Zero publishing and loyalty platform.
• Leads IGN's Indie Open House program to help independent game developers publish games.
• He has designed and released many best-selling mobile and social games, and his game design framework "Variable Dopamine- Wavelength Mapping Theory" is highly respected.

Offchain Labs

Under the guidance of the Xai Foundation, Offchain Labs will be responsible for the development and service of the Xai blockchain. The Arbitrum blockchain created by Offchain Labs has become one of the most successful Ethereum Layer 2 solutions, so it can provide excellent technical support for Xai. At the same time, Offchain Labs has a wealth of successful experience and will provide continuous marketing support for the Xai network and ecosystem to help it continue to grow and develop.

Other core contributors

Currently, the main contributors include:

• Team Secret : Responsible for reviewing games deployed on the Xai platform and deciding whether to go online.
• Thirdweb : Specializes in developing custom account abstraction technology and payment systems tailored for games and decentralized applications (dApps) deployed on the Xai platform.
• Paima Studios : Developing best-in-class Web3 games for the Xai blockchain.

The uniqueness of the Xai project lies in the fact that it is developed by several teams with rich and successful experience in their respective fields, which is extremely rare in the blockchain field. This provides a strong team strength guarantee for the success of the project and makes it stand out in the blockchain field.

Financing Strength

Xai has raised approximately $1 million through three rounds of financing, with the price of each XAI being $0.01, $0.032, and $0.035 respectively. [1]

According to Xai's official website (xai.games), Xai has a strong lineup of institutional investors, including: Animoca Brands, CMS Holdings LLC, Outlier Ventures, Fisher8 Capital, Asymmetric, Akatsuki. Among them, Animoca Brands has the greatest influence. As an investment vane in the blockchain game field, it has invested in 312 projects, mainly focusing on blockchain games, infrastructure and decentralized finance.

Xai has attracted the support of these well-known investors, demonstrating its great potential and appeal in the blockchain gaming field.

Development Strength

According to the official Gitbook list, its development roadmap mainly consists of the following three stages:

(Data source: Xai official Twitter and Gitbook)

According to the chart data, the Xai team demonstrated strong development capabilities and successfully completed all plans in the roadmap on time as planned. This shows that Xai has performed well in terms of team strength and project execution.

Business development capabilities

At present, Xai has achieved two major influential collaborations in business expansion:

• Team Secret : Team Secret is an e-sports club headquartered in Europe, with e-sports divisions such as "Dota 2", "League of Legends", "League of Legends Mobile", "Valorant", and "PlayerUnknown's Battlegrounds". Team Secret is responsible for reviewing games deployed on the Xai platform and deciding whether to launch the game online.
• 2024–3–20, Media Indie Exchange (MIX) : A well-known trading platform in the field of independent games, it mainly helps promote various games, so it has extensive connections in the game industry. The purpose of this cooperation is to help Xai purchase a rich variety of independent games and enhance their distribution through blockchain technology.

Although these collaborations have a certain influence on Xai’s business expansion, it is not clear that Xai has strong resources in the field of business expansion. Therefore, the business expansion capability still needs further observation, which has become a key constraint on whether Xai can grow into a leading project in the Gamfi field.

Project Information Analysis Conclusion

Comprehensive analysis shows that the XAI project is in the leading position in the industry in terms of team professional capabilities, financing strength and technology development, laying a solid foundation for its development in the Gmafi field. However, the project's business development capabilities are not yet fully demonstrated, and this capability has a decisive impact on whether the project can become an industry leader. Therefore, whether the Xai project will have huge growth potential requires continued attention to its business development capabilities.

Project Innovation

From the perspective of both players and developers in the Gamefi field, they face many problems in the field of blockchain games.

Problems faced by players:

• Complexity of wallet operation: Blockchain games usually involve encrypted wallets and digital asset management, which may make the gaming experience complicated and not very friendly to ordinary players.
• Security and Privacy: Players may be concerned about the security and privacy of digital assets, such as private key management, virtual currency storage, etc., which require additional security measures.
• Cost and threshold: Participating in blockchain games may require certain costs, such as purchasing cryptocurrencies, paying transaction fees, etc.
• Game content and diversity: The blockchain game market is relatively new, and game content and diversity may be limited, and players may lack choices.

Problems faced by game developers:

• Technical difficulties: Developing blockchain games requires professional knowledge such as encryption technology and smart contract development, and the technical threshold is relatively high.
• Cost and funding: Developing blockchain games may require a large amount of money to be invested in research and development, smart contract deployment, marketing, etc., which puts a lot of financial pressure on you.

In response to the above problems, Xai has innovated its technical solutions and operating models, making it stand out in the current Gamfi field.

Solution Innovation

In response to the problems faced by players and game developers in the use of blockchain technology, Xai adopted the solution of building an "accessible blockchain game backend + low-cost Gas public chain".

1. Solution to reduce GAS fees: In order to reduce Gas fees, Xai chose to use Anytrust technology on Arbitrum, so that DAC can be used without submitting transaction data to the chain, which is cheaper. In addition, XAI has a certain subsidy for users' Gas fees, so that users can pay the lowest Gas cost when using Xai.
2. Integrate wallet into game backend (core competitiveness): Xai integrates cryptocurrency wallet directly into the backend of the game, which is XAI’s core competitiveness in the Gamfi field, bringing great convenience to players and game developers:
3. For players: Helping Gamefi users manage their wallets allows them to easily trade items without having to frequently operate their wallets, which significantly improves the user's gaming experience and playability.
4. For game developers: This design also saves game developers the tedious work and development costs of developing wallet integration systems separately, and saves a lot of development time.

Operational model innovation

In order to solve the problem of limited content and diversity of blockchain games, Xai adopted the strategy of "self-development + purchasing Web2 games". At the same time, in order to ensure the quality of the online games, Xai cooperated with Team Secret to let professional e-sports players review the playability of the games to ensure the quality of the online games.

The core operating concept of the Xai project is "continuously expanding the team portfolio, with professional teams responsible for professional fields". Compared with traditional blockchain startup teams, Xai's team uses a clear division of labor to handle each link in the game development process, allowing each sub-team to be professionally responsible, thereby significantly accelerating the development of the project.

By implementing solution innovation and operating model innovation, Xai has strengthened its competitive position in the Gamfi field.

XAI Token Model

Xai uses the XAI and esXAI modes in token adoption. esXAI is another blockchain state of XAI, with a 1:1 correspondence, so the sum of the two circulation quantities is the real circulation of XAI. The current total circulation of XAI is 277 million, and the total circulation of esXAI is 64 million (according to official Staking data statistics), so the sum of the two is the real circulation of XAI 340 million.

Token Allocation

The total number of XAI tokens is 2.5 billion, and the specific distribution is shown in Figure 3-1 below:

According to the data information released in Binance’s official report, the first large-scale unlocking will take place in July 2024, and the token circulation will increase by 8%, or 200 million tokens. The unlocking time and quantity statistics of each token owner are shown in Figure 3-2.

Token Utility

XAI is the token of the Xai blockchain. XAI is the gas fee token on Xai L3. It can also be destroyed and exchanged for esXAI at a 1:1 ratio for staking and enjoy staking benefits.

esXAI is a non-tradable and non-transferable token. Its purpose is mainly to stake for various benefits in the Xai ecosystem. The main benefits include:

• Participate in the staking mining pool and receive esXAI rewards;
• Ecological rewards: esXAI holders can experience all games in the Xai ecosystem first and receive token airdrops and other rewards from game projects;
• Governance, esXAI holders will be able to vote on governance proposals.

By comparing the utility of the two, it can be seen that the Xai Foundation prefers users to hold esXAI tokens, which helps stabilize the token price and provide more rights and interests within the ecosystem.

The cleverness of the pledge mechanism

Unique Sentry Key

In Xai’s staking mechanism, Sentry Key is an innovative design:

• Sentry Key cannot be transferred or traded, and is only used to pledge esXAI rewards. This non-tradable feature avoids the fluctuation of Sentry Key’s value and negatively affects the purchaser’s holding behavior, thereby ensuring the stability of the Xai network.
• Only users holding Sentry Key can create mining pools, and users who only hold esXAI can stake through these mining pools. The mining pool creator can decide the distribution ratio of rewards;
• The Xai Foundation has obtained 13,000 Ethereum through the sale of Sentry Keys. The huge sales profits reduce the motivation of the team to sell after unlocking the tokens.

Through the issuance of Sentry Key, the Xai Foundation not only generates lucrative income, but also ensures the stability of the network's stable nodes.

Asymmetric esXAI

Users can exchange XAI for esXAI for token staking at any time, and exchanging esXAI for XAI requires an unlocking period, which users can choose at their own discretion. The exchange ratio will increase as the lock-up period increases:

• 15-day unlocking period. After the expiration, the exchange ratio is 0.25. For example, if a user applies for 100 esXAI unlocking, after the 15-day period, the user will get 100*0.25=25 XAI, and the other 100 esXAI will be destroyed (the same below) ;
• 3-month unlocking period, the exchange rate is 0.625;
• 6-month unlocking period, redemption ratio is 1 (common choice among users);

During the unlocking period, users can withdraw all esXAI, which is considered as canceling the pledge. For esXAI that chooses a 15-day and 3-month unlocking period, the official has the right to redistribute 50% of the eaXAI that should have been destroyed to all pledgers. Due to the setting of an unlocking period, the esXAI rewards obtained from staking will not be released to the market immediately. This means that these rewards will not be converted into XAI and may be sold until six months later. According to statistics (Figure 3-3), the start time of esXAI rewards is December 2023. After entering June 2024, a large amount of esXAI will be converted into XAI every day, so the pressure of staking rewards on prices will also begin to appear in June 2024.

Potential deflation

In the economic model design of XAI, the following mechanisms may contribute to the deflationary effect of XAI:

• All Gas fees will be 100% destroyed, becoming the main source of deflation;
• The high rewards provided by the Xai Foundation to esXAI stakers and the unlocking mechanism of esXAI indirectly reduce the market circulation of XAI.

Therefore, the evaluation formula for the deflationary state of XAI can be expressed as: the number of esXAI that can be converted back to XAI < the number of XAI converted to esXAI on the same day + the number of XAI destroyed through gas fees on the same day, then deflation may occur. In the future, if one or more popular games appear on the Xai chain, resulting in a significant increase in gas consumption, then XAI may enter a deflationary state, which will drive up the token price.

Value capture method

Based on the above analysis, the investment stages of XAI tokens are divided into two:

• From April to August 2024, the game deployment phase is suitable for investors with higher risk appetite.

The investment appeal of XAI tokens stems from their expected circulation deflation. Given that the project is currently in the game deployment phase, according to official expectations, the results will not be seen until August 2024 after the end of this phase. Therefore, for investors with different investment budgets, the best investment strategies for XAI tokens are as follows:

• For investors with limited budgets: Purchase XAI tokens and convert them into esXAI for staking to earn staking rewards.
• For investors with a medium budget: Purchase a Sentry Key to create a personal mining pool to enjoy staking benefits and potential ecosystem rewards.
• For investors with larger budgets: Purchase Sentry Key to create a personal mining pool, and purchase XAI tokens to convert to esXAI. This will not only upgrade the pool level, but also attract other investors to stake their esXAI and get more staking rewards from them.
• After August 2024, the game will be deployed on a large scale and is suitable for risk-averse investors.

After the game deployment phase is over, carefully monitor the circulation data to identify signs of deflation. Once the deflation signal is confirmed, quickly execute the buy operation.

Project Risks

1. Sentry Key's staking weight may be too high : Within the current staking system, independent staking of Sentry Key potentially provides high returns. If rich rewards can be obtained through Sentry Key staking alone, this will lead to an increase in the daily conversion of esXAI back to XAI, thereby exerting downward pressure on the market price of XAI.
2. Limitations of business expansion capabilities : If the Xai chain fails to attract more successful game deployments during the game deployment phase, reducing the possibility of blockbuster games, this will directly affect XAI’s investment attractiveness and long-term growth potential.
3. Inflation-induced sell spiral : If XAI fails to achieve deflation, and as the amount of esXAI unlocked accumulates, the market may enter a "sell spiral". In this case, the esXAI rewards received by Sentry Key holders will continue to be converted into XAI and released into the market, causing continuous downward pressure on the price of XAI.

in conclusion

In the field of Gamefi, many projects are launched, but the success of the game does not only depend on the rationality of its economic model and high playability, but is also limited by external factors such as publicity strategies and market conditions. The probability of success of a single game project is relatively low and is affected by multiple variables. In contrast, if a blockchain platform that supports multiple games can effectively solve users' actual problems and launch many games, its possibility of incubating popular games will be significantly increased. In addition, popular games on the platform chain can greatly enhance the market appeal of the chain.

The Xai project has demonstrated industry-leading advantages in terms of professional team capabilities, financial strength, and technological development, which together provide a solid foundation for its development in the Gamefi field. However, whether its business development capabilities are sufficient to support it to become an industry leader requires continuous monitoring. At the same time, the economic model of the XAI token has a potential deflationary trigger mechanism. If on-chain game activities increase, it may promote deflation and increase the value of the token. However, it should be noted that improper setting of staking weights, challenges in business development, and potential inflation risks may lead to a negative market reaction to XAI. These factors must be considered as important considerations in evaluating the long-term investment value of XAI.

References

[1] Funding amount and price of each round of funding reference: Binance Research - Xai

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