200% definitely works, it isn't fractional.
Make sure it isn't image scaling X11 apps. That can cause blurriness if something isn't running in native Wayland. There's a setting in the display config about legacy apps.
The only things that are blurry are icons and text in KDE panels. Does that mean that KDE panels are not compatible with Wayland?
No, my KDE panels work fine, so that's not the issue.
Tried restarting?
Haha so embarrassingly enough a full restart fixed it. I was restarting KDE by command line and logging out and in because it seemed sufficient but not in every case.
The old turn it off and on again.
Yeah, some things check DPI when they start and then won't respond to changes or receive new environment variables. A reboot makes sure everything is using the newest settings.
That should work. One of the benefits of Wayland is that it's better at scaling than X11. What version of KDE are you running? Is there a switch between two different types of scaling (one is blurry for XWayland applications but works for all of them, the other is sharp for all applications but only some XWayland applications and all Wayland applications work)?
I’m on the latest version of KDE (5.27.8) and scaling works in an X11 session but makes text and icons of my KDE panels blurry in a Wayland session at 200% scaling.
I'm running a 4k monitor at 150% scaling along a 1080p monitor at 100% scaling. Works fine for me.
What is currently still happening though afaik is that the screen buffer is rendered at a higher resolution at 200% scaling and then downscaled to 150%. Hopefully there will be fractional scaling on a protocol level in the future. But it should be barely noticeable unless you have a direct comparison, since downscaling generally retains quality well.
How are you downscaling after upscaling? There is just the option to up the scaling (which makes everything blurry).
I run 2 x 4K monitors with 125% scaliong each. Works really well.
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