Modder c0pperdragon has created an enhancement that will improve the quality and overall video signal coming from your C64 to your monitor. He describes it as follows:
The C64 is the most iconic device of the 8-bit computer era and there is a huge library of software and hardware modifications available. Nevertheless the video output quality is inherently poor by modern standards, even with the use of the s-video option. This is specially true with LCD flat screens that amplify the visual artifacts even more.
The biggest problem here is the fact, that the VIC-II video chip directly creates a chrominance signal in the weird and strange way that is necessary for use with analog television systems. It is then basically impossible to truly convert it back to any form of RGB or other component signal (and I tried really, really hard). And even the luminance signal of the VIC-II is far from perfect and carries a lot of noise from various sources.
So the way to go was then to bypass the chrominance/luminance signal generation of the VIC-II and make a solution that computes a YPbPr signal directly from the digital information available inside the computer. As it turns out, it is enough to passively listen to just about 22 pins of the VIC-II to figure out what video signal it actually intends to generate. Using the information from these pins and some logic implemented in an FPGA, a pixel-perfect replication of the video image can be generated.
In order to create this modification you’ll need some soddering skills as well as the two main pieces. The VIC-II adapter and an FPGA board. Click Here for the full instructions and walkthrough from c0pperdragon. Good luck!