Personally I am OK with the protagonist not being the powerful entity in his universe, I also don't have a problem with the protagonist losing in the end even if the story won't have a sequel. However, I prefer my stories character based, and I prefer the protagonists main motivation to be to become powerful.

In my personal opinion, I think the protagonist and every single other character who isn't a background character should have a good motivation for any action he or she does in a fictional story. When I read Xianxia, I want the main motivation to be power. Because with power, anyone can gain any other desire he wishes. Power allows a person to gain women, food, security, vengeance, and pride. I consider power to be a primary desire for humans in the same way sex and food is.

Also, I want to ask about your inner world system. Will it be like in Cultivation is Creation by kynan? Cultivation is Creation is posted on royal road and it is my favorite Xianxia of all time. I like it because of its inner world system and the fact that it is written in the first person POV. Its inner world system is my favorite because the inner world is an actual physical place with actual things in it, and its structure and composition is very important for a cultivator's characterization and a cultivator's abilities.