Xenophobia
Crunch:
If it is in fact D&D, take inspiration from the mechanics. Sure most demi-humans have TWO +2 bonuses, but Humans can excell at ANYTHING. They don't need any other races. Just other diversely talented humans.
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Fluff:
It began innocently enough with The Great Games.*
Contests of physical and mental prowess. Demi-humans dominated the events, but humans (ever-versatile humans) amassed more overall wins. Resentment amongst the humans grew over being outshone in event after event. Someone (Aberrant Horror Puppet) sponsored a separate event for humans only.
It grew wildly popular with the humans.
Human participation in the original Games dwindled.
Eventually humans weren't welcome at the original games (or they boycotted it).
Depending on if humans were the majority race they could have driven the original games out of existence.
This was just the beginning...
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The City is starkly divided now. After great swaths of the Trade District was burned and looted following the opening ceremonies of the last pan-racial Great Games, some laws were put in place. Curfews for humans here, curfews for demi-humans there.
Eventually, naturally, the races grew apart. It's too inconvenient to get the right paperwork to be where you're 'not supposed to be.'
Aberrant Horror establishes a College of Artifice (or maybe a couple competing colleges, humans do like to compete) in a human district. They "do science" there. Experiments, studies. They study humans and demi-humans and determine that humans are a proto-race.
A proto-race that predates even the gods first appearance to humans or demi-humans (how they prove this I have no idea, maybe they don't prove it, maybe Aberrant Horror 'provides proof').
Radicals from the College (does it need to be said that at this point they're all humans) form an underground movement that uses guerilla and terrorist tactics to do all manner of evil around the city.
Similar groups arise in response in the demi-human areas.
Years (decades?) of hot and cold war follow.
The government grows more and more authoritarian as time passes and conflicts show no sign of stopping.
Aberrant Horror 'cuts off' supply lines to the City. (A plague of goblins on a trade route, a horrible standing storm at sea, etc)
The City grows poorer and poorer. Humans and demi-humans who had stayed throughout years of violence because of the opportunities the city provided now leave.
Humans (through some innovation at the College), learn how to navigate the blockade and save the City.
The terrorists are heroes.
The government, destabilized, poor and ineffectual topples.
The radicals take over.
Xenophobia rules.
The gods are eventually determined to be non-human (regardless of origin) and outlawed.
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Hmmm... lots of holes and weak spots in there, but maybe workable.