It's "live" and not "lives" because it uses the subjunctive mood. When the subjunctive is used the third person changes from lives to live.
May he "lives" long sounds very strange to a native speaker.
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May he live long
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It is because the agreement here is with the ‘may’. It is a formal pattern for good wishes and blessings
May you learn much on your journey!
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I prefer the second one.
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