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FSR is fine if you're okay with some slight muddiness or blurring, and I personally HATE frame-gen because of the input lag problems (which aren't noticable for some people) and the stuttering it can sometimes cause (putting the new frames behind the next frames when you are dropping frames, so you end up with a shaking screen as the old and new mix together.
DLSS is basically the same as FSR for Nvidia players. The 7800XT with FSR3.0 on quality at 1080p should easily raise you above 60+ FPS with your CPU. But with frame-gen you aren't getting 120 REAL frames, just doubling the number of frames you see for no real gain.
Basically, FPS number go bigger, not better.
EDIT: I'd also like to point out that you also need to know your Monitor's hertz. Trying for 120 frames on a 59.9hz monitor is pointless (like playing 2160p on a 1080p monitor, it can't show anything past 1080p, so you're making your system work harder for nothing). Also, I suggest capping your frame-rate, because a stable 60 will probably run better than a frame-rate dropping and raising from 90-120. Losing 30 frames is very obvious and looks bad on screen.
Not a fan of what frame gen does to cause the icons and ui stutter over npc heads and stuff but i've had no combat issues and seems fine to me. I did switch back to standard vs vs the high res pack, but i think that might be cpu choke before gpu. Not sure.
Im using the latest experimental AMD drivers. There is an option to let it do frame gen from the driver side seperate from the Game option
You have a misunderstanding of how frame gen works.
It does make a new frame, from what the previous and the actual frame look like, and calculates what it would have looked like.
Also it shouldn’t affect frame pacing, and at best it make it better. Depends the game ofc, mh wilds got huge frame drop problems to begin with