This document (“XIP-1”) proposes the structure of a decentralized autonomous organization called the Xai DAO that would be governed by holders of $XAI and $esXAI, the decentralized token that will serve as the primary token for fostering, developing, authorizing and/or governing the Xai chain.
Introduction
The Xai Foundation seeks to establish a robust community-based governance framework to empower the community and ensure the sustainable growth of the Xai ecosystem. This proposal introduces the first phase of a three-phase governance model intended to gradually shift control from the Foundation to the DAO.
Phase 1 represents the lightest form of DAO governance, with significant decision-making authority retained by the Foundation to ensure a stable and structured transition.
Phases 2 and 3, to be implemented over the next 24 to 48 months, will progressively transfer more control and autonomy to the DAO, fostering a fully decentralized governance model.
Phased Approach to DAO Governance
The phased implementation of DAO governance is designed to avoid the challenges and risks associated with launching a fully decentralized system prematurely. By taking a gradual approach, the Xai Foundation ensures that the DAO evolves in a measured and sustainable way, allowing the community and ecosystem to adapt while mitigating potential operational or governance failures.
History has shown that rushing into full decentralization without adequate safeguards or preparation can lead to catastrophic outcomes. For example:
The DAO Hack (2016): The Ethereum-based DAO launched with fully decentralized control but lacked proper security measures, resulting in a vulnerability being exploited and the loss of millions of dollars.
Fei Protocol’s Initial Launch (2021): An over-ambitious rollout of the protocol's mechanics caused a significant loss of user funds and a drop in token value, undermining community confidence.
SushiSwap’s Leadership Crisis (2020): A sudden, unplanned transfer of control from the founding team to the community caused uncertainty, demonstrating the need for structured governance transitions.
The Xai Foundation’s phased approach ensures that critical aspects of governance, such as proposal management, voting, and compliance, are tested and refined before more authority is transferred to the DAO. This reduces risks to the ecosystem and enhances the likelihood of long-term success.
This approach ensures a measured and effective evolution of governance, allowing the DAO to mature while maintaining alignment with the Foundation's strategic objectives. This proposal outlines the initial governance structure, community incentive mechanisms, and initiatives to expand the Xai ecosystem into new areas such as artificial intelligence (AI), while preserving its core focus on video games. Additionally, this proposal introduces measures to facilitate U.S. residents to acquire $XAI tokens from US based digital asset exchanges and the adoption of Agora to manage proposals and votes.
Proposal Details
1. Incorporation of Voting Rights into Bylaws
The Xai Foundation will amend its bylaws to establish that any holder of $XAI or $esXAI tokens (including staked $esXAI) on Arbitrum One (link) may participate in governance by voting on proposals.
Each unit of $XAI or $esXAI will contribute proportional weight to the holder’s voting power.
Measures approved by majority vote must be adopted by the Xai Foundation.
Voting rights can be delegated to another wallet address
2. Proposal Discussion
During Phase 1 of the DAO's development, discussion about potential proposals will be facilitated via the Xai Discord #ecosystem-proposal (link).
3. Proposal Submission
The Foundation will select initiatives or policy changes from these discussions for DAO consideration (“Xai Improvement Proposal” or “XIP”)
Proposals will be submitted to a publicly accessible voting site
4. Proposal Voting
Proposals require a standard majority of voting power (50.01% or greater of votable tokens participating in a vote being in favor of the change) to be successful.
Proposals require at least 1% of voting power (“quorum”) to vote for, against, or abstain in order for a proposal to succeed.
Proposals that are submitted will have an initial three day review period (“voting delay”). This period is designed to allow $XAI or $esXAI holders to review the proposal and delegate voting power if required.
Delegates with voting power will then have seven days to vote on the proposal (“voting period”) before the proposal is either successful (“pass”) or unsuccessful (“defeated”).
Pass proposals that require on-chain transactions (i.e. movement of funds) then have three days to be executed (“Timelock”).
5. Binding Effect of Approved Proposals
Any proposal that is passed will legally obligate the Foundation to implement the decision within a reasonable timeframe.
However, the binding effect of a proposal will cease if any part of the proposal is found to:
Be in violation of the law of any relevant jurisdiction.
Pose a risk to the Foundation’s ability to maintain exchange listings for the $XAI token.
Breach any contract signed by the Xai Foundation and still in force.
6. Foundation Veto Power
The Foundation retains the right to veto any proposal that it determines to be impractical, detrimental, or inconsistent with the strategic objectives of the ecosystem.
7. Gas Subsidy Integration
Upon the development and implementation of a permissioned gas solution enabling the recycling of $XAI for gas fees in real-time:
Any gas subsidy allocation of $XAI exceeding 10,000,000 $XAI, as well as future $XAI intended for the gas subsidy, will be transferred to the Xai Foundation Treasury for centralized management.
The Foundation may use the $XAI for operational expenses, community incentives and developer incentives.
The Gas Subsidy Wallet is 0x94F4aBC83eae00b693286B6eDCa09e1D76183C97
This supports the ecosystem by freeing up $XAI, which can then be used to incentivize developers and the community. The proposed new gas subsidy system would be permissioned and reserved for headline dApps, games, and AI initiatives. If abused, permissioned access would be revoked.
8. Genesis Participant Incentives
The DAO approves the minting of 25 million $XAI tokens from the community allocation to reward Xai Vanguard: Genesis participants.
To claim these tokens, eligible participants must sign up on Raijin with a Steam account and have at least one Steam Achievement.
An additional 25 million $XAI tokens should be minted and made available to Genesis participants that continue to be active on Raijin in the form of special contests, accelerators, etc.
Any $XAI tokens not claimed by Genesis participants within 6 months will be reappropriated into incentives for any community member.
These mints will not increase the max supply, the $XAI comes from the community allocation outlined here.
9. Expansion into AI Initiatives
The DAO formally approves the expansion of the Xai ecosystem to include artificial intelligence (AI) initiatives.
While maintaining its commitments to gaming, the Foundation will leverage its resources to expand support to the integration and deployment of AI technologies.
10. Incentives for Ecosystem Growth
The DAO approves the minting of 100 million $XAI tokens from the community allocation to incentivize:
Community adoption and other AI initiatives within the ecosystem.
Continued growth and development of games on Raijin.
Efforts to finance and market third party games.
Miscellaneous community initiatives (DePin, NodeFi, etc)
These mints will not increase the max supply, the $XAI comes from the community allocation outlined here. These tokens will be for the community only and will not be used for Xai Foundation operations.
11. Proposal for Xai Foundation Buyback Program
The Foundation will implement a monthly buyback program to optimize $XAI token liquidity, ensure market makers (MMs) are well-equipped, and maintain a robust reserve for ecosystem incentives.
This program will align the Foundation's interests with the community, demonstrating long-term commitment to token value and utility.
Repurchased tokens will be allocated strategically for liquidity provision, developer incentives, and community-driven initiatives. If necessary, the buybacks may be resold for operational requirements of the Foundation.
This initiative ensures liquidity stability across exchanges, strengthens the Foundation’s operational reserves, and fosters sustainable growth within the $XAI ecosystem.
Immediate implementation is suggested to capitalize on favorable market conditions and reinforce community trust in the Foundation's strategic vision.
12. Approval for Xai Foundation to Enter U.S. Market
The Foundation to pursue listings of $XAI with US based exchanges
13. Adoption of Agora for Proposal and Voting Management
The Foundation will adopt the Agora governance platform to manage proposals and voting processes within the DAO.
Agora provides a decentralized framework that facilitates transparent decision-making, proposal submissions, discussions, and voting, ensuring community collaboration and innovation.
Summary and Next Steps
This proposal establishes a foundational governance framework and supports the evolution of the Xai ecosystem. It prioritizes community inclusion, ensures accountability, and introduces initiatives to foster long-term growth in gaming and artificial intelligence. The adoption of the Agora platform will enhance transparency and efficiency in managing proposals and votes.
The Foundation invites the DAO to vote on this proposal. A majority vote will enable the implementation of these measures, subject to the provisions outlined above.
