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Yeah, it's highly likely that Xenosaga and Xenoblade are part of the same multiverse. And that "Far Flung Dimension, and a power we can know nothing about" might be referring to the Upper Domain where all the Wave Existences and U-Do reside. And it's possible Alvis might actually be another one of those Wave Existences.

Hopefully, the Future Connected extension might elaborate on that.

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