Xai Token, the layer-3 gaming network built on Ethereum scaler and Arbitrum, is structured to have dual functionality within the Xai blockchain. Firstly, it acts as the gas token, facilitating transactions within the network. Secondly, validator nodes receive rewards in Xai tokens for validating transactions and are the main currency accepted for purchasing games and in-game items within the gaming ecosystem. Xai token was also launched through the Binance Launchpool and has been listed on significant centralized exchanges, such as Binance, KuCoin, and MEXC. ^{[1] [4] [8][10]}

XAI Tokenomics

The Xai network utilizes XAI and esXAI (escrowed XAI) to foster equilibrium and integrity within its ecosystem. ^[2]

XAI Token’s Utility & Purpose

XAI acts as the main token on the Xai blockchain, functioning much like tokens on well-known Layer 1 and Layer 2. It can be freely transferred between users.

• XAI is the gas fee token on the Xai Layer 3

• XAI is redeemable for esXAI

esXAI Token’s Utility & Purpose

esXAI cannot be transferred and is primarily used for staking to access various benefits. It rewards Sentry node operators and offers them several advantages. Staking esXAI provides the following benefits:

• Yield: By staking esXAI in the yield account, operators can boost their esXAI yield.
• Creating Pools: Pool creation is exclusive to Key holders, empowering verified community members who meet the security standards and have a history of supporting the Xai community.
• Pooling Keys: Collaboration through pooling Keys minimizes reward randomness, ensuring consistent and substantial rewards for all pool participants.
• Staking esXAI: More pooled Keys mean more esXAI can be staked, leading to higher potential rewards for participants.
• Rewarding Participants: Staking rewards are distributed in esXAI and can be enhanced by additional incentives defined by pool owners. Pools facilitate community building and engagement, offering tailored rewards for a more interactive experience.
• Redeeming XAI to esXAI: Any XAI holder can redeem 1:1 to esXAI and stake with a pool to earn rewards, ensuring inclusivity in the staking ecosystem.
• Culture: Staking esXAI grants access to special events and game assets deployed on the Xai Blockchain.
• Governance: Staking esXAI provides DAO governance rights, enabling operators to propose actions for the DAO/Foundation treasury.

To unstake esXAI, it requires a 30-day unlock period. ^[3]

The Redemption Process

You have the flexibility to exchange between XAI and esXAI in either direction. The rules vary based on the direction you choose.

Redeeming XAI for esXAI

You can exchange XAI for esXAI at any time without facing penalties or restrictions. The conversion ratio is consistently 1:1 (100%).

Redeeming esXAI for XAI
The process to convert esXAI back to XAI involves an unlock period, which users can select. The conversion ratio will increase proportionally with the chosen redemption duration:

• The minimum redemption duration of 15 days will provide a 1:0.25 ratio (25%)
• The middle redemption duration of 90 days will provide a 1:0.625 ratio (62.5%)
• The maximum redemption duration of 180 days will provide a 1:1 ratio (100%)
• If the selected redemption duration is lower than the maximum (ratio < 1:1), the penalty amount of esXAI is burned.
• Any esXAI redeeming process can be freely cancelled at any time by the user.
• Any cancelled redeem before its end will void the whole process. Users will retrieve their entire amount of esXAI, and no XAI. ^[5]

Overall, the Xai Foundation has the authority to reserve a maximum of 50% of potentially burned esXAI to support the Network.

Initial Allocation of XAI

Team: A portion of 20% of the total supply has been designated for the core team and early contributors. This allocation will start to unlock six months after the Token Generation Event (TGE) and will gradually release over 36 months, totaling 42 months.

Investors: Around 22.41% of the total supply was acquired by investors during early rounds. This allocation will commence unlocking six months after the TGE and will be distributed over 24 months, totaling 30 months.

Ecosystem: Initially, 2% of the total supply has been set aside for market makers which will be available immediately at the TGE. Additionally, 5.5% of the total supply has been reserved for the ecosystem. This allocation will start to unlock six months after the TGE and will be released over 36 months, totaling 42 months.^[6]

XAI & esXAI Emissions & Burning

The Maximum Total Supply of XAI and esXAI combined amounts to 2.5 Billion tokens.
Total Supply is the total amount of XAI and esXAI that exists at any given time, whether locked or unlocked.
Circulating Supply is the total amount of XAI and esXAI that exists and is unlocked (excluding any locked portion).
All of the gas fees paid in the Xai ecosystem are paid in XAI and burnt ^[7]

The daily emission rate of esXAI from Sentry nodes in the Xai ecosystem is determined by the combined Total Supply of XAI and esXAI. XAI's Total Supply decreases due to gas burning within the ecosystem, while esXAI's Total Supply also decreases through burning during redemption. The emission rate of esXAI adjusts dynamically based on Total Supply thresholds, automatically halving when specific thresholds are reached. If Total Supply falls below a halving threshold due to burning, the emission rate of esXAI can increase to meet demand. This flexible mechanism ensures consistent rewards for Sentry Nodes while controlling the overall supply. As the Total Supply approaches half of the Maximum Total Supply, daily emissions decrease, with reductions occurring at specific intervals as the Total Supply increases.

85% of esXAI emissions are directed towards supporting the vital operations of Sentry nodes, which are crucial for maintaining the network's integrity. The remaining 15% is designated for a gas subsidy node aimed at facilitating a gasless experience for players, reducing friction on the chain, and potentially increasing transaction volume^[7]

Estimated Network Rewards and Value

The combined total of XAI and esXAI will never exceed 2,500,000,000 tokens. Predicting monthly token rewards per Sentry Key in the dynamic Xai ecosystem is challenging. All gas fees are burned, so the supply may experience periods of deflation. The Xai Foundation plans to sell no more than 50,000 Sentry keys over 2-3 years, with prices expected to increase over time. The monthly quantity of esXAI per Sentry Key will fluctuate based on staking participation and amounts staked by participants.

Given the dynamic nature of Xai network rewards and the unpredictable adoption rates of sentry nodes, establishing an exact valuation at any given moment is challenging. One key assumption is that the number of nodes sharing the entire sentry node allocation is limited to the cumulative amount up to its respective tier. It's important to note that the sentry node allocation will be distributed over several years. However, the possibility that burning 100% of gas could result in periods of deflation, potentially impacting network rewards. In reality, the actual valuation could be significantly different, so it's advisable to create your scenarios when evaluating value. ^[9]