I’ve facing same issue here, after one week of test, the performance issue seems specific to Stray on Proton on Linux on Xen Hypervisor, I’ve tried another game Valheim which known for crappy optimizations and it runs close native performance, but KVM/QEMU can handle both well, I guess I’m out of luck here.
Suffering with Performance Issue with Xen vCPU pinning and GPU passthrough
Try disabling KMS, at least if you have NVIDIA. I added to my grub config (of the HVM) the following:
GRUB_CMDLINE_LINUX="$GRUB_CMDLINE_LINUX rd.driver.blacklist=nouveau nvidia-drm.modeset=0"
Now my Factorio FPS went from ~10/12 to the standard 60.
This was inspired by Enabling kernel modesetting (KMS) for nvidia drivers in GPU PCI-passthrough HVM causes horrible performance · Issue #10042 · QubesOS/qubes-issues · GitHub
Distro I tested this with is Fedora 42 XFCE so your mileage may vary. Just adding this in case others find it useful.