Hello Ronak,
I have used XIP.
It does not seem to have helped.
I got much the same result.
API node does not complete the job.

looking at the vcap logs looks similar to above:
cloud_controller_ng_ctl reports that Blobstore is accessible, but it is still stuck in an endless restart loop.

looking at the generated cf-deployment.yml as you requested I find the following lines ( I have obfuscated the public ip):
properties:
acceptance_tests: null
app_domains:
- APPDOMAIN
...
packages:
app_package_directory_key: 10.60.18.186.xip.io-cc-packages
blobstore_type: webdav
...
public_endpoint: http://blobstore.10.60.18.186.xip.io



Also, in my original cf-stub I configured the properties as such:
properties:
domain: 10.60.18.186.xip.io
system_domain: SYSDOMAIN
system_domain_organization: EYALDOMAIN
app_domains:
- APPDOMAIN

So unless I was using improperly, adding the xip domain did not seem to help.