There is nothing worse than playing multiplayer and having somebody who is cheating. Viable and promising games have been ruined by people cheating.

But I don’t see an easy way around the issue but these are the usual solutions:

1. Reporting mechanism and admins able to observe cheaters and impose heavy penalties / permabans
2. Add anticheat on server side that detect for cheating (e.g. measuring % hit rates / headshots)
3. Anti cheat software on client that looks for common cheat hacks
4. Stream everything. It’s all hosted on the server, nobody installs anything, limiting ways to cheat.
5. Disincentivize cheating by not acknowledging people doing it in any way - no rare loot, no leaderboards, no material gain
6. Make it a 3rd party problem - release the server or sell hosting and make it somebody else’s problem to police the servers (e.g. Rust / Minecraft servers)

Personally I’d prefer that multiplayer games obtain consent to install anti cheat and should certify through auditing that the anticheat software is inactive and nonintrusive when the game is not running. Perhaps operating systems could even provide hooks and hard guarantees that this is the case.