Hey Nikola, thanks for the detailed report with logs, it really helps. Both messages Extension host not ready after 10 attempts and Timeout waiting for auth ready signal are downstream symptoms that the Extension Host isn’t starting in time. This is a known issue on our side, and it looks like corrupted workspace storage state.
Before wiping your whole ~/.cursor again, try this more targeted workaround. It worked for another user with the same symptoms Terminal and agent interface not working for workspace until related Cursor workspace storage is manually deleted
- Fully quit Cursor.
- Delete the folder for the specific workspace from this path and make a backup first:
The subfolders have hash-like names. You can find the right one by running~/.config/Cursor/User/workspaceStorage/greponworkspace.jsonfor your project path, or just delete them all if there aren’t many. - Start Cursor again and open the project.
If it comes back, I’d like to understand the trigger. Did you notice any pattern, for example:
- Does it happen after specific actions like a big chat, lots of terminals, or reloading the window?
- Does it line up with opening or closing a specific extension or MCP server?
- Do you see anything in the Extension Host logs Output > Extension Host right before it stops responding?
We’re tracking the issue, but I can’t share an ETA for a fix yet. If there are updates, I’ll reply in the thread.