XAI: The Layer 3 Gaming Chain That Arbitrum Built From Scratch
By BCGamer —
Tags: xai, arbitrum
What Is XAI?
XAI is the first Layer 3 blockchain in the Arbitrum ecosystem, purpose-built for gaming. While everyone else was fighting over Layer 2 territory, Arbitrum's core team at Offchain Labs decided to go deeper and build a gaming-specific chain one layer down.
The pitch is simple: make blockchain gaming feel like regular gaming. No wallet popups. No gas fee panic. No seed phrase lectures. Just games that happen to have real ownership and tradeable assets running in the background.
XAI launched its mainnet on January 9, 2024, and immediately made waves as Binance's 43rd Launchpool project. Within months, it became the highest-volume EVM chain by transactions per second, processing over 9-12 million daily transactions at its peak.
The Origin Story
XAI emerged from a problem that gaming studio Ex Populus couldn't solve anywhere else.
Tobias Batton, CEO of Ex Populus, spent two years testing deployments on "some of the most well-known L1s and L2s in the industry." The conclusion was brutal: "Deploying our games to those blockchains would create a horrific user experience that would destroy our game's chance to succeed."
So Ex Populus partnered with Offchain Labs, and together they built XAI from the ground up. This wasn't some random team throwing together an L3 — this was Arbitrum's own developers building a custom gaming chain with direct technical support.
XAI was first announced in June 2023, ran a successful testnet campaign called "Xai Odyssey" in late 2023 that scaled to nearly 5 million daily transactions, and launched mainnet in January 2024.
The Team & Backers
The Xai Foundation oversees the network, with support from:
Offchain Labs — The Princeton-founded team behind Arbitrum itself. They're not just advisors; they provided direct development support for XAI's infrastructure.
Ex Populus — The "labs company" that serves the Xai Foundation. Founded by Tobias Batton (20+ year gaming veteran, previously drove nearly 1 billion mobile game installs through Signal Zero), along with:
Mark Harris — Oscar-nominated, Emmy-winning Pixar animator
Soban "Soby" Saqib — Prominent NFT collector and DeFi yield farmer
Clement Wong — 50x ICO investor
Randall Nickerson — Technology lead
The Ex Populus team has experience from Pixar, Ubisoft, Activision, Blizzard, Wargaming, IGN, and more.
Funding:
Ex Populus raised $3M in 2021, then $8.5M at an $80M valuation
XAI raised approximately $10M through three private rounds at $0.01, $0.032, and $0.035 per token
Sentry Node sales generated over 13,000 ETH (~$42.7M) — the largest mint in Arbitrum ecosystem history
How XAI Works
XAI is built on Arbitrum Orbit using Arbitrum Nitro technology. Here's what that actually means:
Layer 3 Architecture:
Ethereum (L1) → Arbitrum (L2) → XAI (L3)
Each layer adds speed and reduces costs
XAI settles to Arbitrum, which settles to Ethereum
Inherits Ethereum's security through this chain
Anytrust Technology:
Maximizes speed while minimizing costs
Enables near-instant transaction finality
Makes "gasless" gaming experiences possible
Key Technical Features:
Account abstraction — wallets work in the background, players don't need to manage them
Gas subsidies — the Xai Foundation and game developers cover transaction costs
Wallet abstraction — no crypto wallet knowledge required to play
Xai Connect — identity solution that moves wallets to the backend entirely
Performance:
138+ TPS at peak (highest in gaming blockchain space)
Became #1 EVM chain by TPS in June 2024 according to L2Beat
Processes 9-12 million daily transactions
1.7+ million active wallet addresses
The Sentry Node System
XAI uses a unique "Sentry Node" system for network security. These nodes monitor the rollup protocol and issue alerts if incorrect blocks are proposed.
How it works:
Anyone can purchase a Sentry Key and run a node
Node operators earn esXAI rewards
Nodes operate in 28+ countries across 6 continents
December 2023 node sale: 13,000+ ETH raised
Late 2024: "Tiny Sentry Key" sale made participation more accessible with a 1:100 key split
The node sale created a new trend in crypto gaming that other projects copied throughout 2024.
Tokenomics: XAI and esXAI
XAI Token:
Total supply: 2.5 billion
Gas token for the L3 blockchain
All gas fees are burned (deflationary pressure)
Can be converted to esXAI for staking
esXAI (Escrowed XAI):
Initial Allocation:
Team & early contributors: 20% (42-month vest)
Investors: 22.41% (30-month vest)
Ecosystem: 2% immediate + 5.5% over 42 months
Launchpool: 3% (75M tokens)
Airdrop: 5% (125M tokens)
January 2024 Airdrop Distribution:
Vanguard NFT holders: 1,307 XAI per NFT
Legendary NFT holders: 290 XAI per NFT
Sentry Node operators: 1,658 XAI per node/key
The Games
XAI's ecosystem spans multiple genres, with games either live, launching, or migrating to the network:
From Ex Populus:
Final Form — TCG auto-battler with rogue-lite mechanics, burn cards to evolve them
LAMOverse — Battle royale with destructible environments, hovercar combat, phygital NFTs tied to physical vinyl figures (Ninja, Dr. Disrespect partnerships)
Major Migrations:
Crypto Unicorns — Pet collection/simulation game that migrated from Polygon, named #1 play-to-earn game by DappRadar
The Lost Glitches — Trading card game with role-playing elements from Honig Studios
Live/Launching Games:
Tarochi — Fully on-chain RPG (Pokemon-style), every action recorded on blockchain
Riftstorm — Co-op looter-shooter with roguelite elements, demo launched on Steam
Planet-X — Mobile extraction shooter with real-world prizes
MAYG (My Angry Yakuza Girlfriend) — Turn-based strategic shooter
Europe Fantasy League — Football management integrating real-world sports data
Tollan Universe — Recently launched
Kaidro, Valeria, Yaku Corp — Upcoming
Partnership with The MIX:
Key Developments & Milestones
2023:
June: XAI announced with Offchain Labs support
August: Xai Odyssey testnet launched
Q4: Testnet scaled to 5M daily transactions, 500K connected wallets
December: Sentry Node sale (13,000+ ETH)
2024:
January 9: Mainnet launch + Binance Launchpool
January: 125M XAI airdrop to community
February: Lunar New Year airdrop (88 XAI per first key)
April: Partnership with The MIX for 100+ indie games
June: Xai Connect identity solution launched
June: Xai Builder development platform released (powered by Sequence)
June: Xai Vanguard: Genesis campaign made XAI #1 EVM chain by TPS
August: 9M+ daily transactions, 1.7M+ active wallets
Q3: 86,669 daily unique active wallets, 11M+ quarterly transactions
Q4: Tiny Sentry Key sale with 1:100 split
2025:
Continued ecosystem growth
Raijin rewards platform driving Steam chart success (7 XAI games topped Steam)
Beamable partnership for 8B+ monthly API calls
Riftstorm demo hit Steam Top 50
The Legal Drama: XAI vs xAI
In a twist that could only happen in crypto, Ex Populus sued Elon Musk's AI company xAI for trademark infringement. The lawsuit claims Musk's venture caused market confusion and reputational harm after entering gaming adjacent spaces.
The U.S. Patent Office suspended xAI's trademark filings due to overlap with the gaming XAI. This case remains ongoing and creates uncertainty for the project's branding.
Token Performance: The Brutal Reality
Let's be honest about what happened:
All-time high: ~$1.59-$1.60 (February-March 2024)
All-time low: ~$0.01 (October 2025)
Current price: ~$0.01-0.02 range
Decline from ATH: ~99%
The token launched hot with Binance Launchpool hype, pumped on airdrop excitement, then bled out over 18 months like most gaming tokens in this cycle.
What went wrong:
Aggressive token unlock schedule (607%+ yearly inflation at points)
Games delayed or underdelivered
Broader gaming token market collapse
High initial FDV relative to actual usage
Play-to-earn fatigue across the industry
What's still there:
The tech works (highest TPS gaming chain)
Active development continues
Ecosystem games are actually launching
Direct Arbitrum/Offchain Labs backing
Institutional infrastructure is real
Gaming Relevance Assessment
Why XAI Matters for Blockchain Gaming:
First Arbitrum L3 — Direct technical support from the team that built one of Ethereum's most successful scaling solutions
Actually Gaming-Focused — Not a general-purpose chain that added gaming as an afterthought
Wallet Abstraction Works — Xai Connect and account abstraction mean players don't need crypto knowledge
Steam Integration — Multiple XAI games appearing on Steam charts through Raijin platform
Migration Destination — Studios leaving Polygon and other chains for XAI's infrastructure
TPS Leadership — Proven ability to handle millions of transactions (not theoretical, demonstrated)
Concerns:
Token Price Destruction — 99% down makes holding painful
Game Quality Questions — Many games still in development or just launching
Competition Intensifying — Immutable, Ronin, BEAM all fighting for gaming market share
Trademark Uncertainty — xAI lawsuit creates brand confusion
Unlock Pressure — Continued token emissions
Final Thoughts
XAI represents Arbitrum's direct bet on gaming. This isn't some random team — it's the Arbitrum developers themselves building infrastructure specifically for games.
The technology works. The transactions process. The wallet abstraction functions. The partnerships are real. Binance listed it. Steam games are launching on it.
The token? Destroyed like most gaming tokens this cycle.
But here's the thing: if blockchain gaming actually takes off, XAI has the technical foundation and institutional backing to capture significant market share. They're not scrambling to figure out infrastructure — they built it with the best L2 team in the business.
Whether the token recovers depends entirely on whether the games actually attract players. Final Form, Riftstorm, Planet-X, and the MIX's 100+ indie games need to deliver real engagement, not just speculation.
XAI is a legitimate gaming blockchain with serious backing. The question is whether "legitimate" and "serious backing" translate into sustainable player numbers and token demand. So far, the tech has delivered. The games are the final test.
This post is for informational purposes only. Always do your own research before investing in any cryptocurrency or blockchain project. XAI is the first L3 gaming chain with direct Arbitrum developer support. The infrastructure is proven. The games are launching. The token is down 99%. Classic crypto gaming.