[Urgent]Xterm on Xwayland and Weston not working: xterm: Xt error: Can't open display: %s

Hi all,

I’m currently testing a GUI app on a custom build of BalenaOS image. The board I’m using is Congatec SMX8Plus ( NXP imx8mp SoC). It doesn’t support X11 backend or Xorg, so I need to use Xwayland and Weston.
My understanding is that with Xwayland, I will still be able to run X apps such as xterm. However I’m getting error such as “xterm: Xt error: Can’t open display: %s”

My dockerfile looks like follows:

FROM balenalib/generic-aarch64-debian:buster-run

ENV INITSYSTEM on
ENV UDEV=1
ENV DBUS_SYSTEM_BUS_ADDRESS=unix:path=/host/run/dbus/system_bus_socket

# Install dependencies
RUN install_packages \
    zlib1g-dev \
    fuse \
    libxcomposite1 \
    libgtk-3-0 \
    libnss3 \
    libxss1 \
    libasound2 \
    xterm \
    x11-apps \
    weston \
    xwayland


ENV DISPLAY :0

CMD ["/bin/bash", "-c", "xterm"]

I’ve been reading other posts and playground projects around Wayland and noticed maybe some volume mapping or environment variables need to be set. But I’m not sure how exactly.
Please help!