I currently have an Nvidia GTX 1080 with 8GB of GPU memory. It can interpolate 720p but not 1080p videos.

Will the Nvidia RTX 3080 be able to handle 1080p interpolation? The RTX 3080 only has 2GB more GPU memory for 10GB total.

Hard to tell since, as my thread already mentioned, DAIN doesn't work with RTX 3080 at the moment.

Wait for the 3080ti, which is rumoured to have 20GB of vram. I mean not that you'll be able to get one until way into next year, by which time DAIN may support the 3000 series.