Airdrop Incoming: Is Layer3 Xai, the Gaming Chain in Arbitrum's Ecosystem, Worth Farming?
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Airdrop Incoming: Is Layer3 Xai, the Gaming Chain in Arbitrum's Ecosystem, Worth Farming?
Xai's future development is unpredictable, but its innovative efforts are commendable.
Navigating Web3 tides with focused insightsAuthor: Kasou Kazoku, PANews
On December 16, 2023, Xai, a gaming Layer 3 within the Arbitrum ecosystem, posted a cryptic message on social media: "ai_dr_p soon," sparking widespread attention across the cryptocurrency community. This brief and subtle announcement seemed to hint at an upcoming token airdrop by Layer 3 Xai—an event that undoubtedly injected fresh momentum into the entire gaming ecosystem. As Xai prepares for its token distribution, let's take a look back at the project’s journey so far.
Xai's tweet about the upcoming airdrop
Xai recently unveiled its tokenomics, drawing attention to its allocation mechanism
Looking back at Xai’s development, it released its token economics on October 26 this year. The total supply of Xai and esXai (staked) reached a staggering 2.5 billion tokens. More notably, over half of the supply—50.1%—was allocated to the community, Sentry node operators, and the Data Availability Committee (DAC), highlighting Xai’s emphasis on rewarding contributors and community members. Meanwhile, 22.4% was assigned to investors, 20% to team members, and the remaining 7.5% dedicated to ecosystem development and maintenance.
Technically, XAI stands out as a permissionless Orbit chain built using the Arbitrum Nitro technology stack, aiming to deliver a gaming-centric Layer 3 solution for the gaming industry. This architecture not only improves transaction efficiency but also enhances network scalability, unlocking new possibilities for game developers and players alike.
Dapps in the Arbitrum ecosystem
Additionally, Xai’s network allows anyone to participate through node operation. This provides regular users with opportunities to earn network rewards while also enabling them to take part in governance—a feature reflecting Xai’s commitment to decentralization and offering tangible participation and contribution pathways for community members.
Notably, Xai was developed by Offchain Labs using Arbitrum technology. This collaboration underscores Xai’s potential in technological innovation and ecosystem building, further cementing its standing and influence within the cryptocurrency space.
As community anticipation for Xai’s airdrop continues to grow, we can expect the ecosystem to enter a new phase of growth. In the following sections, we will delve deeper into Xai.
Approaching L3: A closer look at XAI’s foundation and recent developments around Sentry nodes
A deeper dive into XAI reveals that financial backing and technical infrastructure are key to its success. Like many blockchain projects, XAI is supported by a foundation. Specifically, Xai is backed by the Ex Populus Foundation, which raised $12 million two years ago, along with undisclosed additional funding. This capital base—especially when compared to Offchain Labs’ fundraising of over $120 million—indicates that the XAI project has solid economic underpinnings.
Regarding XAI Games’ Sentry nodes, there have been notable developments. As an L3 blockchain, XAI’s design enables different operators to run nodes across various platforms—whether cloud-based, laptops, or desktops—ensuring network integrity and security. This flexibility opens up new avenues for broad user participation in blockchain operations.
Particularly noteworthy is the sales model for Sentry nodes. XAI Games plans to sell 50,000 node key NFTs via a Dutch auction. In this model, prices decrease over time, starting at 0.13 ETH. Currently, the price at tier 9 has already reached 0.4 ETH. Linking Sentry node pricing to Ether may be an attractive strategy for investors, though it also introduces exposure to market volatility.
In summary, the financial support from the Xai Foundation and the innovative sales strategy for Sentry nodes form two pillars of the XAI project. These elements not only provide a robust financial foundation for future growth but also offer participants novel technological and economic opportunities. Next, we’ll explore Xai’s token economy and its potential impact on the broader ecosystem.
Understanding XAI and esXAI: Exploring the core economic design and development dynamics of the project
XAI is not just the native token of the Xai blockchain—it serves as the cornerstone of its ecosystem. Similar to traditional L1 and L2 tokens, XAI has broad and critical utility. It is fully transferable and functions as the gas fee token within the Xai L3 ecosystem, meaning all network operations and transactions require XAI as fuel.
The total supply of XAI is clearly distributed among different groups. Of this, 20% is allocated to the core team and early contributors, with vesting beginning six months after the Token Generation Event (TGE) and fully unlocking over the next 36 months. Another 22.41% was purchased by early investors, with vesting starting six months post-TGE and completed within 24 months. For ecosystem allocations, 2% is designated for market makers and unlocks immediately at TGE; 5.5% is reserved for ecosystem development, with vesting starting six months after TGE and concluding over 36 months.
Xai testnet has processed over 60 million transactions
XAI can also be converted into esXAI, a special type of token. Unlike XAI, esXAI is non-transferable and primarily used for staking within the Xai ecosystem, granting stakers various privileges. These include rewards for Sentry node operators and access to exclusive benefits. The esXAI staking mechanism allows node operators to freely allocate their staked esXAI across three distinct accounts:
Yield Account: Node operators who stake esXAI here earn additional esXAI rewards.
Culture Account: By staking esXAI, node operators gain access to exclusive gaming-related events and NFTs on the Xai blockchain.
Governance Account: Node operators can acquire DAO governance rights through staking, including the ability to propose how DAO/foundation funds are used.
The conversion mechanism between XAI and esXAI is bidirectional, allowing users to choose based on their needs. Converting XAI to esXAI is free, with no penalties, and occurs at a consistent 1:1 ratio. However, converting esXAI back to XAI involves a lock-up period determined by the user. The exchange ratio varies depending on the length of the lock-up—longer periods yield higher conversion rates.
This conversion mechanism has significant implications for the Xai ecosystem. First, it introduces deflationary pressure, as all gas fees paid within the Xai ecosystem are burned. Second, the emission of esXAI to Sentry nodes depends on the current circulating supply of both XAI and esXAI. This dynamic emission rate is designed to automatically adjust according to changes in total supply, ensuring flexibility and adaptability.
Moreover, the XAI-esXAI conversion mechanism effectively reduces market sell-off pressure. Combined with Xai’s strong gaming ecosystem—including partnerships with major players like Tencent—this design proves particularly valuable. It not only supports the sustainable growth of the Xai ecosystem but also gives community members time to observe explosive ecosystem growth post-mainnet launch and decide whether to hold.
The reward structure for the Sentry node network within the Xai ecosystem is another aspect worth noting. While precisely predicting rewards per Sentry node is challenging, estimations based on market conditions and assumptions can illustrate potential reward scenarios. These estimates assume that the total supply of XAI and esXAI will not exceed 2.5 billion, that 100% of gas fees are burned (creating deflation), and that the Xai Foundation will not sell more than 50,000 Sentry keys.
The economic models of XAI and esXAI form the core of the Xai ecosystem. Their interplay influences not only network efficiency but also the long-term stability and sustainability of the entire ecosystem.
The future of Xai is unpredictable, but its innovative efforts are commendable
As the Xai ecosystem evolves and matures, the design of the XAI and esXAI tokens reflects ambitious goals in building a diverse and sustainable blockchain environment.
XAI, as the foundational token of the ecosystem, provides the fuel necessary for network operations, while the introduction of esXAI offers participants enhanced staking opportunities and incentives. This dual-token system ensures efficient network operation while encouraging community engagement and investment.
With this in mind, we can anticipate that the XAI ecosystem will continue attracting more participants and investors. Its deflationary mechanisms and staking incentives are poised to create a stable and vibrant environment for Xai in the future—driving internal ecosystem growth and potentially bringing new innovation and momentum to the broader blockchain industry.
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