tl;dr; Run sudo launchctl stop com.apple.cmio.VDCAssistant
to unfreeze your apps while using a Studio Display on macOS Catalina.
If you try to use Apple's new Studio Display on macOS Catalina 10.15.7 you end up with horrible app freezing problems. Apps like Chrome, Discord, WhatsApp, Zoom, Messenger, etc, are all freezing once a Studio Display is plugged in.
As someone pointed out on this thread, the "VDCAssistant" process seems to the source of the problems. This process is just related to managing video cameras for Apple services. And apparently disabling it fixes the app freezing issue!
So to fix the issue, just temporarily disable VDCAssistant
by running this command in a Terminal: