Microsoft is likely to keep physical game editions in the next Xbox generation, and for Project Helix, it may consider an alternative to Blu-ray discs, such as cartridges, like those used by Nintendo Switch.
This is indirectly indicated by a new vacancy for an Xbox physical games supply specialist. The future employee will be responsible for the release of physical editions, global distribution, inventory planning, and interaction with stores. This may suggest that Microsoft is not going to completely abandon boxed games.
After the recent Disc-to-Digital initiative, the company seems to see an opportunity to attract players dissatisfied with Sony's approach to physical media. Currently, the presence of a Blu-ray drive in Project Helix is not confirmed. Windows Central suggests that Microsoft may be exploring other options, including cartridges used by Nintendo Switch and Switch 2.
For now, these are just assumptions: Microsoft has not officially announced plans to release games on cartridges.