Maybe
Ok first let me just apologize for taking so long. I know some days were me just putting out a funny image or something that just interested me. Between the events and stuff going on in game and being unusually busy this month I just didn't have it in me to write this out even when I did find some time. Also when stuff like that glitch from IWTL show up I got reminded of wanting to make a guess at the full map of Teyvat that I also put off for a while lol
Hey at least it's not as bad as the theory I keep talking about having all the way from last year that I still haven't made my video for lol
Anyway just so we're all on the same page let me just say this first. After Yae released we got a ton more information about what MiHoYo decided on after they had to change the Inazuma storyline. Off of that I got to work piecing together what might have happened in the region from start to the present. Early on I actually wrote out a short story based on this theory. That story was well received by MiHoYo enough to justify selecting it as a contest winner so I'm taking it as getting their blessing.
So to start we have to look at Yae's Character Story 4. It straight up describes how Inazuma got its start.
Some time either during or before the Archon War Yae in her original form gathered together the youkai to protect the humans in their care. They eventually found and settled on the islands that would become Narukami named after the banner that they united under. It is likely this original form of Yae was either Hakushin herself or even a predecessor to her line but she would have had to still be related to the kitsune because of two things: 1. She needs to maintain that Inari Okami inspiration. 2. She'd need to be capable of kitsunetsuki or possession by a fox spirit. This is why in my short story I entitled this version of Yae as the Okami. (so I'll be calling this form the Okami from here on out 
)
Similar to Morax's Guili Assembly the Okami set up a structure to protect the humans using the different types of youkai under her leadership starting with the other kitsune directly taking orders from her to the footsoldiers like the tengu and oni. This organization just like Morax's allowed her to secure a spot in the Original Seven. She'd have likely needed to do battle against many Archons too because of how close Inazuma is to the Dark Sea where any surviving Archons fled in defeat. It is also probably seeing how many lost their lives during this conflict that the Okami learned her philosophy of Transience. (Yae Miko has voicelines about it that sound like a lament.) At this point in time Inazuma was at best the islands of Narukami, Kannazuka and Yashiori with Seirai and Tsurumi unsettled and Watatsumi of course non-existent.
Once the Archon War ended the Original Seven would end up starting a tradition of meeting in Liyue for drinks thanks to the shenanigans of Barbatos. This is when the Okami would have met both Morax and Ganyu and began their long friendship. Ganyu would also continue to discuss their international relations up until the passing of the Sakoku Decree thousands of years later.
Unclear is which happened first the appearance of Orobashi or the arrival of twins Makoto and Ei from the mainland. We know Makoto and Ei arrived because there's a book that Ei confirms is mostly accurate up until the slaying of Orobashi and it states that Narukami (this time meaning the Shogun) came to her people. This emigration to Inazuma mirrors the real world arrival of the Yamato into Japan. (also the Yayoi but we might actually get information on a previous migration of foreign people onto the islands so for now I'm saying Ei and Makoto represent the Yamato)
Anyway one day Orobashi rescues the people of Enkanomiya by using his scales to create Watatsumi. Though obviously concerned that a new landmass suddenly sprouted up out of the water the Okami maintained peace with Orobashi and shared the region with the new Archon. Even though that technically means there are 8 Archons when only 7 of them count as rulers as The Seven it works out because over in Mondstadt Istaroth also shared the region with Venti up until she left to pretty much cause Orobashi's arrival and the creation of Watatsumi. So 8 gods with only 7 in charge is a thing.
After the twins arrived the Okami took them under her wing and gave them both Electro Visions. She trained them under her ideal of Transience which also plays a role in Japanese philosophy based on Buddhism called mono no aware. The problem was that Makoto and Ei believed in Eternity. It is likely when they fled from the mainland to Narukami they suffered some traumatic event that caused them to fear death. As mortals this is very understandable.
Side note: Also this sets up a cool parallel between them right? I said earlier that the Okami saw the deaths of her fellow Archons and her subjects during the war and that taught her that nothing can last forever aka Transience. The twins likely also saw death and in fact we know Ei ends up fixated on Eternity because she's afraid of losing her friends and losing herself to erosion. It might even be this connection that the Okami chose to take them under her wing.
But while Makoto was more open minded and the Okami was slowly getting through to her Ei was stubborn and thought in simple black and white. She even believed that Orobashi was going to be a problem because of the change he brought to Inazuma. Over time Makoto began to reconcile her mentor's Transience with her Eternity. She started considering the transience of ambitions in humans as they worked towards their ultimate eternal dream. On the other hand Ei doubled down on Eternity and believed in a practically militant strategy of maintaining it.
Ultimately Ei forced the Okami's hand and they had a duel at what would end up being named Mt. Yougou. (It means something like shadow's influence or shadow's direction btw.) Both of them unleashed a Musou no Hitotachi against each other. This was actually meant to be a ploy by the Okami because the technique literally means using a single instantaneous strike and it could only be properly performed by having no idle thoughts in the mind. These are both concepts in Buddhism related to transience. But Ei was stubborn enough not to see the irony of using it to defend eternity. On top of that she was also stubbornly simple enough that she really did have no idle thoughts in her head because all she thought about was eternity.
Side note: In hindsight Yae probably should have guessed that this would happen. I mean musou is easy to accomplish for a person who literally can't grasp too many new ideas and also probably really hard for someone as cunning and inventive as Yae is especially when her goal was to convince and not kill her rebellious pupil.
Having both held back her full might and not having true conviction in her attack the Okami was handily brought down by Ei. (Btw also very Japanese. The philosophy suggests that a stronger conviction leads to your strikes being "true" and that will mean you win. Watch Rurouni Kenshin lol) However despite being as stubborn as she was Ei knew enough about her own limitations that she would not make a good Archon so she handed the Okami's Gnosis to her sister instead. They agreed that Makoto would hold the position of one of the Seven for ceremonial and diplomatic purposes while Ei acted as her sword and made appearances where the Archon would have to show her strength.
Orobashi was under orders by Celestia. His time with the Enkanomiyans unfortunately meant reading about their old legends which Celestia wanted to keep hidden hence burying the land to begin with. Orobashi made a deal with Celestia to allow the people back to the surface in exchange for none of their old secrets leaking out to the surface. That also meant he had to die as well. Seeing the power struggle and ultimate downfall of the Okami he decided to use that excuse to attack Narukami. Under the new regime Ei set out in a show of force and killed Orobashi with the Musou no Hitotachi as well.
Side note: Wait I hear you ask. But that happened during to Archon War! Says who? We only hear that from humans who weren't even around for Khaenri'ah nevermind the Archon War. But I'll indulge you. The Archon War was the event that established the Seven right? But each of them didn't get their seats at the same time. Morax already established Liyue 3700 years ago and the war ended 2000 years ago. That's 1700 years where from Liyue's POV the war was already over. 1700 years is a long time for Morax to already be one of the Seven. So let's say Inazuma was done with the war a long time ago too and then about when the war ended everywhere Ei kills the Okami. Technically it happened during the Archon War but the Okami would have still been one of the Seven for who knows how long already.
These two incidents also show the lack of restraint in the kagemusha because with each attack she created large schisms in the land. The fight on Yougou split the mountain and created a giant hole underneath. The fight on Yashiori split the island itself. She also had no answer for the lingering resentment of Orobashi in the form of Tatarigami which poisoned anybody that stayed too long on the island. Ei would also lose a friend during the conflict Sasayuri. The loss caused Ei to commit even further to her goal of eternity.
Time went on. The twin Archons allowed Watatsumi's people to live independently of Narukami and continue to pay respects to Orobashi while Ei would keep them under her protection. The old regime under the youkai was replaced with the Shogunate Bakufu under the power of humans and their allogene Archon.
Eventually change catches up to Inazuma. A large scale attack by Khaenri'ah caught Teyvat off guard. They were led by Rhinedottir who used the human magic of Khemia to create twisted and poisonous monsters as her army. In Mondstadt she builds a dragon creature called Durin and in Inazuma she creates ghostly wolves and shadow creatures to lay siege to the regions.
Side note: It's still unknown if she attacked the other regions. Judging from the attack on Monstadt and Inazuma it could be that Khaenri'ah is located slightly to the southeast of the 7 regions so Rhinedottir's forces made landfall on Mondstadt at Dragonspine and easily made it to Inazuma. Meanwhile it is likely the forces under Morax kept them at bay around Guyun before they could reach the rest of Liyue. After being stopped by Barbatos and Dvalin on Dragonspine Khaenri'ah would have no way further inland to where Sumeru, Fontaine, Natlan and Snezhnaya are located. At the same time this could be why Musk Reef is home to the Spiral Abyss since it is further out from Dragonspine so while Barbatos was busy with Dvalin a detachment from Rhinedottir's forces could have secretly set up a base at Musk Reef. After her defeat and the destruction of Khaenri'ah it could be that the Spiral Abyss was abandoned until they reorganized into the Abyss Order and reclaimed it.
During the conflict Inazuma could not overcome the corruption brought on by the enemy forces. Even with all her power Ei couldn't slow down the damage. Her remaining friends Chiyou and Saiguu eventually sacrificed themselves to buy Inazuma a little more time but even that wasn't enough. Chiyou would eventually be corrupted herself and Saiguu's body was dissolved by it.
As Ei continued to struggle Makoto was visited by someone she thought died long ago her old mentor. It turned out that Archons can't die. The Tatarigami left by Orobashi was actually Orobashi's current form. Marchosius became Guoba, Andrius became a spirit, Osial became a shikigami and so on. The Okami also became a spirit actually an onryou having been embittered by her defeat at the hands of Ei. But with her mind still intact she was bound by her duty to protect and guide the humans.
So still haunting Mt. Yougou she watched as a young kitsune a descendent of the Hakushin line raced up to the Narukami Shrine. Following the death of Saiguu the young kitsune decided to make her last stand too. She was attempting to perform a ritual that might defeat some of the monsters. But once she reached the shrine and stood at the cliff's edge the Okami chose to strike. Instead of the ritual the Okami shot down as a bolt of lightning and her power alone purified some of the monsters. At the same time she infused her spirit into the young kitsune Yae Miko and was reborn.
With her knowledge as an Archon she found a way to contact the primordial shade and God of Time Istaroth who had aided the humans before in Enkanomiya. The two of them conspired a plan to protect Inazuma and Yae Miko left to find her better student. She explained to Makoto the dire situation they were in and that nothing she nor her sister did would be enough to remove the corruption. There was only one way to have a chance and it would require one of the Archon sisters to die. As an Archon death just means changing form and the Okami knew specifically which form Makoto would have to take.
The plan was for Makoto to head for Khaenri'ah itself. Knowing how dangerous it was once Ei heard the news she would immediately go to protect her sister. At Khaenri'ah Makoto would ultimately be killed since she was never a fighter. The timing had to be just right so that she would die in Ei's arms. With Ei's stubborn commitment to Eternity she would stop Makoto from dying with her power and take her back to Inazuma. Now thanks to the power of the God of Time wherever Ei chose to leave Makoto that would become a bridge in time. At the right moment Makoto would override Ei's power and die. As an Archon in death she would wither and become a seed. Ei could then plant the seed far in the past. As the tree grew it would spread its roots across Narukami island and connect with the Leylines already embedded in the ground. With the power of the Leylines and a wide network of roots the tree would be able to absorb the corruption spread by Rhinedottir's forces. Additionally in the aftermath of the attack Ei would have brought Makoto's body back to this changed Inazuma where there was a tree growing out of the place that she chose - Mt. Yougou. She unconsciously chose to keep her sister at this spot since her mind lingered on the inconsistency.
Side note: Basically the reason Ei would pick Mt. Yougou to take Makoto is because the tree would be there but the reason the tree would be there is because Ei picked that spot. It's a time loop and that's what Istaroth was for. So she used Makoto to set this up. When Ei finds her she keeps her alive as a consciousness and brings her back to Inazuma. Since the plan is to use Makoto's death to turn her into the seed for the Sacred Sakura that means she'd always be the Sacred Sakura from the point in the past where future Ei would plant her. And because she'd always be planted Ei comes back to Inazuma seeing this tree there and ends up being manipulated into putting Makoto there setting it up as the place where the tree would be planted. Moving on! lol
Ei was devastated by the loss of Chiyou, Kitsune Saiguu but most importantly her own twin sister and suffered a mental breakdown. She fully commited to her ideal of Eternity out of grief and fear. (and more stubbornness) She'd also learned about erosion (maybe it was even the Okami's dying words to her just to be a sore loser 
) so she knew even as an Archon her time was limited and now that was definitely not acceptable. So she experimented with artificial bodies and developed at least 2. The prototype was a failure but she couldn't bring herself to destroy it so she just locked away its powers and left it to roam. Eventually she built what she believed was the noblest and most eminent body. To protect against her own erosion related mistakes she programmed this body to not be reprogrammable and to have safeguards against her in case she deviated from Eternity herself. The only thing Ei could really do is limit the body's powers and actively use it as she saw fit which is why she needed those safeguards. These controls were just so she wouldn't be left without a body to use because since her physical body was prone to erosion she was going to leave it and house her spirit in an object.
Side note: It's unclear if Yae influenced her to do this. We know that she taught Ei how to do it but also knowing Yae's personality it wouldn't be a stretch to believe she indulged Ei in her meltdown and maybe even suggested the "give up your body and shove yourself into Makoto's sword" plan. 
Side note 2: It's also unclear how long Ei and the real Yae knew each other. From what we learned Yae was very young at the time of Saiguu's death and Ei headed off into Euthymia not long after Makoto's death around the same time. So real Yae shouldn't have been able to be old friends with Ei. I'll get into what I think happened later.
With Ei no longer possessing an Archon's body she could not hold onto Makoto's Gnosis so she entrusted it to Yae Miko who she'd gotten close with. (maybe through Kitsune Saiguu) "Yae" of course noticed the irony but she decided to keep the humor to herself and support Ei given her role in Makoto's death. As she was still their mentor and Archon she still wanted to guide Ei and the plan was still in play at this point.
For over 400 years Yae held onto her old Gnosis and supported the Raiden Shogun who upheld Ei's strict system of unchanging eternity. She reintroduced herself to at least Morax and Ganyu and continued to discuss their international relations as before. She even learned a silly mortal name Morax was trying out Zhongli. The old geezer was inspired by the Okami's "retirement" and was considering one himself. They also discussed the situation with Ei and decided it was best to continue the public façade that Makoto was still the Archon to help Ei's emotional state.
At some point Fatui diplomats arrived on Inazuma and ingratiated themselves to the Tenryou Commission under the Kujou clan. They manipulated the Tenryou with greed and the foolish Kujou clan leaders bought it hook line and sinker because they figured even if they were being fooled the Fatui stood no chance against the Raiden Shogun so no plan of theirs would actually work in the end. Actually the Fatui plan was to feed into Ei's fears. When they reached a breaking point they could convince her to do their plan. And as luck would have it they didn't even need to deal with the real Ei just some robot that had actual hard programming to carry out any plans that preserved eternity.
So over time they convinced the Shogun that the only way to stop change from happening was to lock up the entire region from the outside world (except for the Fatui of course) and then to strip the Visions from all allogenes because the Visions allowed for ambitions in humans and ambitions made humans try to bring change. This idea even struck a personal note for Ei still floating around and hearing this plan. After all she was an allogene too once upon a time and she actually brought change herself by killing the original Archon. And with her fear of death she wasn't about to let another allogene possibly kill her. And so came the Sakoku Decree and the Vision Hunt Decree.
These decrees created chaos in the region. Everybody panicked as a giant thunderstorm appeared and encircled the region. The locals who had Visions fought or ran in fear of the Tenryou who came to confiscate them. The fighting terrified the rest of the locals. Foreigners who'd been visiting were suddenly cut off and couldn't leave but the Kanjou Commission also forced most of them onto the tiny island of Ritou to segregate them from the local Inazumans. And finally having always been self-governing the Watatsumans were shocked by the insane actions of their adopted leader. Under the direction of the Sangonomiya clan they set up a resistance movement and tried to protect as many Narukamans as they could.
The Fatui expected the resistance. They talked the Tenryou into committing to an all out war against them. At the same time they sent another envoy to Watatsumi and began to deal with the Sangonomiya clan. On the Tenryou side they pushed them to defend the Shogun's eternity and crush the resistance. They were stronger and had more numbers and the territory of Watatsumi would be more riches to plunder if they could force them under their direct control. On the Watatsuman side they set up a deal: They'd supply military funding and equipment and Sangonomiya would just have to greenlight their operations on Watatsumi and Yashiori. Desperate and outnumbered they agreed to the terms and welcomed the equipment and manpower.
Under the surface though everybody except for Narukami had another plan.
-The Fatui wanted the Gnosis so the operation was to drive the Shogun to madness. The destability of the region weakened her position and in the chaos they might make out with the Gnosis since the Shogun was far too powerful to take head on. At the same time they'd be pushing Watatsumi to their breaking point so maybe in their desperation they'd gladly try out the newest version of Delusion technology. They could profit both from the sale of these experimental Delusions and gain data about their efficacy and drawbacks while the Watatsumans used them.
-Sangonomiya Kokomi wanted true independence from Inazuma. She saw how greedy and despicable the Fatui were. She calculated that they'd overextend and then she could prevent them from getting what they wanted at her people's expense while also weakening Narukami so she could declare Watatsumi's independence. If she played her cards right she could even blame any mishaps along the way on the Fatui and also use them to help unlock the gates to Enkanomiya because the Holy Soil Phenomenon was coming up again.
-For Yae's part all of this was in preparation to get the Sacred Sakura aka Makoto planted which also required that Ei finally mature and understand the foolishness of Eternity. The Fatui plot, the Watatsuman Independence movement, Sakoku, Vision Hunt all of that was transitory. None of it would have lasting effects so she could use them to push Ei into waking up.
And then suddenly a traveler from afar arrives.
Wait but how does any of that change Ei? So far I've just said that she's very stubborn like dense stubborn. She's stubborn enough that she can pull off the musou just by being stubborn enough to only be thinking about 1 thing ever. And that eternity kick she's on only gets stronger the more she loses and she's lost pretty much everything.
Now I can talk about how Ei and Yae became "old" friends. So to review Yae was a young kitsune at the time of Kitsune Saiguu's death which is also Khaenri'ah's attack and Makoto's death. Not long after that Ei sends her spirit into the sword and doesn't come back out for 500 years. Even if we were to say that young means young adult kitsune Yae's not really in the running to be Ei's "old" friend especially if Saiguu's still around for it all. Saiguu would be a much older friend.
But the Okami would be an old friend the oldest friend Ei could have ever kept. If we look at Yae's voicelines she also has something to say about Ei's Euthymia. She believes sealing yourself away like that could actually make erosion happen faster. So let's go back a little to figure out the signs of erosion. Azhdaha is so far our only proven example so the answer to what does erosion do is memory loss. But not just any kind of memory loss. Erosion makes you forget the events but still remember the emotions.
It is likely that Ei forgot many things about her past including that there was ever a previous Archon before Makoto. At the same time she'd have forgotten that she killed the old Archon but she'd still remember her mentor emotionally. Cut to possessed Yae finding Ei after Makoto's death and a confused and sad Ei might have forgotten that she doesn't really know Yae Miko. She just has this feeling of knowing her for a very long time because she knew the Okami and trusted her as her mentor. Yae then teaches her how to put her spirit into objects.
At the same time losing her memories might have caused her to soften up so she wasn't as crazy about her eternity as she became after losing her human loved ones, then Sasayuri, maybe some other friends in between, Chiyou, Saiguu and then Makoto. We know she still clearly remembers Saiguu and Makoto but isn't it funny she doesn't mention Chiyou when she's talking about Khaenri'ah? She died around the same time. Anyway the hits might not have hurt as hard which opens the way for her to finally change and the final piece of the puzzle for that is us this really big change to her eternity since we're the only person who can use elements without being a vishap, Archon or allogene.
And yes that means many of the things we hear from Yae are lies. I mean it shouldn't be surprising. At the end of the quest she tells us Ei stopped following Celestia and the Heavenly Principles a long time ago but when we're in Euthymia she's still telling Ei that the Heavenly Principles she believes in are wrong. And in the new Character Quest Makoto also points out that her transformation into the Sacred Sakura goes against the Heavenly Principles like it's a learning moment for Ei. Yae lies. Like many times. If you need more proof just play her Character Quest.
Anyway in the upcoming event the Irodori Festival this will be the outcome of all these changes. Without the Sakoku Decree Inazuma can progress into the Human Age possibly under some kind of bureaucratic system. That's probably why Ayato is leading this through the Yashiro Commission and why Yae's also involved while Ei isn't. I already talked about this but it's basically Genshin's version of the Meiji Restoration, post-WWII Japan and Japan's Cool Japan campaign.
Now this is what I think happened after the changes. For what happened originally you can click here.
Tips and Tricks from a Super Casual Genshin f2p
