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Despite the growing capabilities of autonomous agents powered by large language models (LLMs), their adoption in high-stakes domains remains limited. A key barrier is security: the inherently nondeterministic behavior of LLM agents defies static auditing approaches that have historically underpinned software assurance. Existing security methods, such as proxy-level input filtering and model glassboxing, fail to provide sufficient transparency or traceability into agent reasoning, state changes, or environmental interactions. In this work, we introduce AgentTrace, a dynamic observability and telemetry framework designed to fill this gap. AgentTrace instruments agents at runtime with minimal overhead, capturing a rich stream of structured logs across three surfaces: operational, cognitive, and contextual. Unlike traditional logging systems, AgentTrace emphasizes continuous, introspectable trace capture, designed not just for debugging or benchmarking, but as a foundational layer for agent security, accountability, and real-time monitoring. We further demonstrate how AgentTrace integrates with OpenTelemetry for extensibility and ecosystem compatibility. Our experiments show that AgentTrace enables more reliable agent deployment, fine-grained risk analysis, and informed trust calibration, thereby addressing critical concerns that have so far limited the use of LLM agents in sensitive environments.
