Xu Dog is a kind character and merchant that you can meet in Chapter 2 of Black Myth Wukong. He will teach you the art of crafting potions and eventually allow you to invest in passive buffs.
You can meet Xu Dog just outside Sandgate Village in Chapter 2 of Yellow Wind Ridge. When you first enter this region, follow the main road that crosses the lake and turn left along a ridge to reach the Village Entrance Shrine.
Check the area just beyond the shrine for a small canal that runs under a wooden bridge. Follow this canal to the other side under the bridge and turn right into a tunnel. Inside, besides a green Wisp you can absorb for some Will and a mushroom you can harvest, you'll find a dirty but friendly dog god.
Xu Dog has a problem that needs help: A large frog has swallowed one of his medicine formulas, and you're the right person to bring it back. You can find the frog miniboss Lang-Li-Guhh-Baw near a large pit, and it can use electrical attacks to defend itself.
Once you defeat this frog boss, it will drop an Evil Repelling Medicament formula. Return it to Xu Dog outside the pit. Not only will he give you 2 Evil Repelling Medicaments as a reward, but you'll also unlock the ability to create various useful medicinals at any Shrine. With all the materials you harvest, you can stock up on reinforcements, defenses, and status effect removal items.
In the Cellar of the Crouching Tiger Temple
The next time you can find Xu Dog is later in Chapter 2, and he is hidden under the Crouching Tiger Temple. To enter the cellar, you will need both Sterness of Stone and Keeness of Tiger from the two Vanguard bosses: the Stone Vanguard and Tiger Vanguard. Afterwards, you can interact with the tally in the middle of the temple next to the headless statue to discover a secret tunnel.
Fight your way through the tunnel to find a path to a cave that leads outside on a steep slope. Slide down, and you'll reach a Shrine for the Crouching Tiger Temple's Cellar. At the steepest part of the cellar, you will see a familiar friendly face - the Xu Dog that you helped get the medicine recipes!
Talk to him while he's in front of his big furnace, and the Xu Dog will thank you for your help by giving a Mind Core. He will also teach you the art of creating your own Celestial Medicines apart from the Mortal Medicine consumables you have created.
Celestial Medicines are like passive buffs that you can apply by exchanging Mind Cores, which can be found in various places - by defeating bosses and sometimes regular enemies, or in chests . Buffs range from familiar health/stamina/mana increases like Celestial Pills, but also other stats like Crit Chance or immunity to certain afflictions.
The best part of these new passive buffs is that you have the option to reset them just like your Skill Tree, which will give you all the Mind Cores you've used so far, allowing you to go back and -reallocate points to suit your needs.
In addition, Xu Dog will replenish his store as you progress through your adventure, so be sure to visit him in each Chapter to spend more Mind Cores, and buy new recipes and goods.
Xu Dog's Store - Chapter 2 Stock
Longevity Decoction Formula - 2700 Will
Chapter 3 Stock
Mirage Pill (x3) - 720 Will
Tonifying Decoction Formula - 2700 Will
Enhanced Tiger Subduing Pellets (x3) - 900 Will