How is 10% of your PURCHASE price bad? It'll give the game a fixed value, that you could possibly get back a year or 2 after the product is irrelevant (though I'm sure there'd be a cutoff date.) One of the worse things about Physical trades is the huge depreciation on some titles. I like the idea that early-adopters never end up getting less, this way.
And if they open the door to this, I'm sure there's be promos. "Sell back Fallout 8 for Fallout 9, get 20% off!" and such. Heck, they'd probably even do 100% "Trade Ins" as a deal on occasion. It'd also be unique to Xbox for a time, and would encourage the competition to try offer their own variations (such as how PS+ was adapted by Xbox GWG).
I'm not a person who trades in games, but there's been a few times where I've got a digital game because a friend wanted to play together, and when they show no interest anymore, I might as well get rid of it. If getting a few dollars towards something I like more could come from that, why not?