Even when run under Wayland, VSCode looks blurry with a scaling of 150%... Wayland advocates love to mention that the real issue is using fractional scaling at all, but Windows and macOS can deal with it just fine.
--enable-features=UseOzonePlatform --ozone-platform=wayland
[1] https://wiki.archlinux.org/title/Visual_Studio_Code#Running_...
It shouldn't when running natively; it should render everything at the correct size rather than scaling them. X apps get blurry because they're rendered large and downscaled; that shouldn't happen for native Wayland apps.