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The "Bay of Rebirth" was founded at the same time as Astra, but with a crucial difference. When thousands of souls reincarnated on the coast near Astra, they had Ghale Anthwun Amalo and the "First Nine" to unite them.
The thousands of other souls who awoke in the 150-mile-deep bay, 1700 miles away, had no such leadership.
The result was a chaotic, pragmatic scramble for survival. The refugees segregated themselves by culture and race, founding their own rival city-states on the bay's resource-rich shores. By Year 50, six major, non-allied powers had emerged:
Seacliff: (Humans/High Elves) The "high-minded" but disorganized political center.
Port Krell: (Dwarves/Gnomes) The grim, industrial "Forge" of the bay.
Greenharbor: (Wood Elves/Halflings/Forest Gnomes) The "Breadbasket," located upriver.
Ashenport: (Tieflings) The insular, fiercely independent city founded by outcasts.
The Roost: (Tabaxi/Owlin) The vertical cliff-city of scouts and messengers.
Rusthaven: The lawless "cast-off" town for pirates and criminals.
For decades, these six states existed in a stagnant, zero-sum loop of feuding. This all changed around Year 50 with the arrival of the Anishinabe Confederacy trade fleets.
The Anishinabe, the true naval power of the region, saw this chaotic, competitive bazaar as a goldmine. They established massive, formal trade routes:
They traded Tepe-grown food to Port Krell in exchange for Hosteki-quality steel.
They traded for Seacliff's massive timber reserves.
They opened lucrative markets with Greenharbor, Ashenport, and The Roost.
This "Anishinabe Connection" was the "economic boom" that transformed the Bay. It became a bustling, chaotic, and wealthy region. It was a place where an artisan could get rich, but also a place of intense competition, boredom, and a sense of "what's next?"
This new wealth and boredom was the perfect tinder. The spark was a con artist.
A "map seller" in Rusthaven, having heard rumors of an "ancient mountain" 110 miles south, began to sell fake maps in the taverns of Port Krell and Seacliff. He claimed they led to a "lost Aasimar treasury." Having never seen the place, he gave this mythical, treasure-filled valley a grand, fantastical-sounding name he invented from whole cloth: "Eyelyss," the valley "he had never laid eyes on."
It was a "gold rush."
Hundreds of bored, newly-wealthy artisans, merchants' sons, and restless adventurers from the six city-states bought the map and began the 110-mile trek south, seeking the "lost treasure of Eyelyss."
The "gold rush" adventurers didn't find a treasury. They found the 30-foot-tall statues of the Celestial Knights.
Past the statues, the bravest entered the "Sacred Mountain," seeking the "hoard." They found the Dungeon of Fire.
As your lore states, the Dungeon tested their "mind, heart, and soul." And they failed. They were found unworthy. But the Dungeon, not being truly "evil," let them leave.
These "worthy failures," now broken and humbled, could not bring themselves to make the 110-mile "walk of shame" back to their old, mundane lives in Port Krell or Seacliff. They were a people obsessed, defined by the trial they could not pass.
They settled, as a "colony" of the Bay of Rebirth, at the very foot of the statues, just outside the maze's entrance. They sardonically adopted the only name they had for it: Eyelyss.
The name stuck, a perfect, bitter, and accidentally profound joke. It was the town founded by a "blind" con man, and it was now populated by people "blind" to everything but the invisible Tower of Light they could never reach. This is the stagnant, faith-based town that Alwyn's Hope (founded in Y172) now provides a pragmatic, industrial alternative to.