In response to MEV and trade censorship issues, dYdX would like to explore the implementation of Trusted Execution Environments (TEEs) (e.g. SGX server) on the protocol's validator set. TEEs would allow the protocol to manage client deployments and enable encrypted market order data, preventing censorship and frontrunning. The goal of this research is to explore the viability of TEEs as a solution to MEV. The team will experiment with bandwidth and order processing on TEEs, and develop a framework for implementing this as a solution. If the research is successful, and the dYdX community or contributors chooses to use the framework, the team will unlock an additional success fee.

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.