Xenophon Labs has conducted research on the efficiency of both the Liquidity Module and Safety Module in dYdX. The research was published in detailed written reports and accompanying Dune dashboards to visualize the data. Through this research, both modules were found to be inefficient sources of DYDX protocol emissions. Following the Liquidity Module research, the community approved a proposal to sunset the module, resulting in 383,562 DYDX accruing to the dYdX Community per epoch. In total, the protocol is saving +19M in DYDX emissions through this proposal.

Grant will fund two Research papers and subsequent community proposals, Token Design for V4 Migration & Protocol Parameter Migration. Similar to the work previously done for Trading Rewards, the goal is to produce two in-depth research papers that can be used to guide the community through governance proposals to implement changes. The first paper will address the upcoming community responsibility for token migration to the new chain. The second paper will address all parameters existing on today's protocol that may or may not need to be changed and implemented for the new chain. Both papers will provide in-depth insight and be followed with governance proposals based on the lessons learned.